I have a bunch of classified LiDAR data that I need to make a raster DEM & DSM from. From what I can gather my options are use the Point to Raster tool directly on the a multipoint feature, use las dataset to raster, or make a terrain first and generate the rasters from that. There are no breaklines or anything besides the LiDAR data that need to go into this. Interpolation will be required as well. The documents I read about this choice all say the Terrain to Raster produces higher quality results, but they don't elaborate. What exactly do they mean when and why do they say this? In my case that has just LiDAR data going in is it worth making a Terrain first or not? Does the Terrain method provide better interpolation options or something?
LAS Dataset to Raster unless you have a really large collection in which case I'd recommend LAS Dataset to Tiled Raster which you have to download from http://links.esri.com/3dsamples
You should not have a multipoint dataset - converting LAS to multipoint is very inefficient except for very small samples. The Terrain dataset is intended for long term maintenance of an authoritative bare earth DTM but not intended for multiple returns, DSM, etc.