This discussion has been going on in the Kyrie thread, and that's not really the right place for it, so I thought I'd start a new thread about it here.
Since the tournament expanded to 64 teams in 1985, there have been 26 tournaments. In that time, there have obviously been 104 #1 seeds and 104 #2 seeds. Of those, 45 #1 seeds have made the Final Four (43%), vs. 23 #2 seeds (22%), almost twice as many #1s as #2s. There have been 16 #1 seeds who became champion in those 25 years, against 4 #2 seeds (excactly four times more #1s than #2s).
Some people have stated the opinion that the reason the #1s have succeeded better than the #2s is because the #1s are better. I'm sure that's part of it. But I believe a much bigger part of it is the road of the #2 is much harder.
Can we prove it, either way? Not definitively, but I have dug a little deeper and here's my data:
Historically, #1 seeds are 104-0 against #16s. #2 seeds are 100-4 against #15s. Is the difference because #1s are better? Possibly, but probably not. There's such a huge difference in skill between the #1/#2 and the #15/#16 that it's more likely that the the #15s are better than the #16s. Either that, or random chance, which might be the most probable conclusion.
#1 seeds have beaten #9 seeds to the tune of 58-6 and #8 seeds by 53-13, a combined total of 111-19. #2 seeds have beaten #10 seeds by 28-20 and #7 seeds by 56-21, for a combined total of 84-41. Here, I'm sure some of the difference is due to #1s being better than #2s, but my guess is it's much more likely that 7/10s are a lot better than 8/9s, either because they are more likely to be underseeded (the 10s) or because they're just plain better (the 7s).
Either way, apparently only 84 #2 seeds have reached the Sweet 16 in 26 years, while 111 #1 seeds have done so. That difference of 27 is actually more than the overall difference of #1s over #2s in making the Final Four (22). And if that's really where the difference is, I would argue that the road is more of an explanation than the inherent talent differential between #1 and #2.
To go a little further, in the next round, #1 seeds are 39-17 against #4s and 38-7 against #5s, while #2 seeds are 34-21 against #3s and 22-10 against #6s. That's 77-24 (76.2%) against 56-31 (64.4%), a fairly large differential, and in my mind more than you'd expect for the best four teams vs. the next best four teams, again supporting the idea that the competition is stiffer for the #2s. The #1 seeds also got to play twice as many double-digit seeds as #2s have (because #4 & #5 are more likely to lose early than #3 or #6). This piece of luck has absolutely nothing to do with how good the higher seed is, and in those bonus games, #1 seeds have gone 20-0 while #2 seeds have gone 9-1, giving 10 (really 11, I suppose) additional #1s a chance to reach the Final Four.
In the last three rounds, #1s beat #2s, 34-28. Here we finally see some evidence that #1s are better, but it's a reasonable 55%, rather than double or quadruple.
I found the full breakdown
here.
My conclusion is the road matters. Being a #1 seed gives you a big advantage in reaching the Final Four over being a #2 seed.