The smoker pot and aluminum foil pouch work on the principle of starving the wood of oxygen so it does not fully burn, but just smolders. Plus, if the holes are pointed downward into the fire, then the escaping vapors burn off the volatiles (like the alcohol), giving you a cleaner smoke.
Placing the chunks of wood directly in the basket does work, as you said, if you're patient enough to let it burn past the white smoke phase, but on the downside, you've lost some wood in the process that's not giving you the full benefit.