There's only one main reason to level freeze & level freezing does have negatives but it's not substantial considering how the game works.

For someone who can substantially pay to win, if you avoid everything that gives you experience you will benefit from it substantially- the goal/reason for levelling freezing is generally 1st/2nd/3rd in Sage world, if you have that opportunity you should definitely utilize it, for those that aren't 100% p2w there are side effects too doing it but as I mentioned, those side effects are not substantial(maybe).

So before the update it used to be that you could level freeze by avoiding everything that gave experience (Daily Practice/Cat Quiz/Jinjuriki/9Tails & useless events like Anko Exam, etc)- for a free to play, player, you were actually missing quite a lot of power items, because the game would give Coupons/Refines or Myoboku Gifts from the Daily Practice & Timed Events, the increase from these weren't huge in the short term but they are a way to stay relevant long term, but your power gain isn't completely halted due to Hot Topics as such level freezing doesn't really have any real substantial negatives, because although you may be behind in power on your server, if you compare yourself to others of your own level, you'll find you may be actually be quite far ahead & that is what actually matters in turn that allows you to enter Sage World & win Advanced refine fragments which are very hard to get, this is where your advantage will come from.

Now with the new update almost everything gives you either Sun/Moon coins, making the Daily Practices & Timed-Events a lot more beneficial than they were before, especially Anko Exam that was previously ignored completely as it gave EXP and nothing else, now it gives 1200 Moon Coins which means you are potentially losing a lot of power by stalling levels now as the coins you can gather for power is actually quite substantial, but seeing as the goal realistically is to take advantage of the Advanced refines, it's still technically beneficial it's just wither you personally want to do it..

Level freezing is worth it (100%) but you have to be able to take advantage of it, if you can't purchase power to allow you to win Sage world, it probably isn't.

TL/DR
People let on as if level freezing allows you to "Collect" all this power, it doesn't- you are actually gaining less power from not taking part in events, but you're doing it to be able to win top 3 in Sage, no other events gives you such a huge amount of Advanced Refines, so as you're losing power everywhere else, you're gaining power from the hardest to obtain power item, that's essentially the trade off.