One thing is that I'm told that 26" wheels were developed to be similar radius to 700c with the different size tire installed. so the attempt was not really to create a difference in the first place.
26" have more tire options toward the fat end, so if you are a 1.25 tire or larger person, this is your rim, 700C is the reverse, perfect for the person who wants loaded touring at 37mm through to say 28MM for light touring.
Beyond tires, the smaller wheel is stronger. You can go to 36 spokes and have the effect of a 700c at say 40 spokes while using relatively standard components. In addition for the same hub the rigging angle is more favourable, again stronger smaller wheels. The smaller wheel is lighter, and the distance from center is lower, which means it's esier to spool up and keep spooled up, a big factor in quickness and energy overall. The larger wheel is better rolling relative to roughness in the road, which is present even in a fairly smooth road; and rolls better relative to hub friction, might be a factor with a generator a pro on the downhills, an con for spooling up. Large wheels roll over bumps more easily and are easier on your body because the ride is smoother.
Gearing wise the smaller wheel has a natural abilty to deliver lower gears, while maintaining a tighter gear spacing, and less problems from chain suck and so forth. On the other hand you would have to choose the lower gearing, it's worse for you if you want a high gearing.
The smaller wheels take up less space on the frame leaving room for fenders, racks and for the whole machine to be lower in the wind. Of course this assumes that the frame was built to take advantage of these features... Smaller wheels provide more fit options since a large rider can easily ride 26" wheels, while 700c can be worse for small riders.
Parts for smaller wheels are easier to carry, so your extra tire and tubes weighs less. And parts are generally easier to find in most place in the world. Often seems as though for the same rim the smaller wheel is easier to change tires while fixing flats, though that sounds wrong so maybe the rims aren't really the same.
Larger wheels brake more effectively with rim brakes, but less effectively with disc.