A good writing workshop is a discussion. Read the work and talk about it together. What works, what doesn't work, and why? This detail is factually wrong and should say X instead of Y. This bit would benefit from clarification. You've used the same word four times in one paragraph; try some synonyms. Did you realize that the only black guy just died? Is that on purpose? Yes actually, I meant for all of Rachel's boyfriends to be assholes, because that's a common problem for abuse survivors.
As a teacher and a scholar, I look at results. Which method yields the best results? Standard format writing workshops suck by this metric. Almost everyone hates them. That means they have an extremely high dropout rate. Moreover, of students who stick with them, the work has a high dropoff rate -- people often hate what's been workshopped and never want to look at it again. It drives a lot of people away from writing. It can be downright dangerous for some people with anxiety issues or past trauma, and it can create those problems in previously healthy people. A free flow of ideas makes it much easier for people to target issues that need fixing and learn why and how to fix them. It's also easier to develop a group culture regarding the balance of praise and criticism. Similarly, a higher level of interaction makes it possible to capitalize on diversity because you learn more from each other that way.
I've done both. I learned very little from traditional workshops because, frankly, other students weren't even at my then-current level and usually the teacher wasn't either. I did have some awesome writing classes, but they were not workshop format. I've gotten kill-a-chicken-over-it critiques from professional writers a few times that were very useful.
I think the most I've learned has been from crowdfunding. I have this audience full of people who are wildly different from me and from each other. They give me all kinds of ideas I'd never find on my own, so I have to do research. If I mishandle something, they tell me -- and nowadays, it's usually because the official source material is bent. So then I have to hunt down horse's mouth references. That's happened at least twice, with multiple personality and with autism. That never would've gotten fixed in a workshop class because I couldn't say, as I did here, "Well, the Mayo Clinic references say X so I wrote X. If X is wrong, where do I find more accurate not-X written by people with Trait A?" The conversations people have about my writing, and that I have about other people's writing, can be about the technical aspects (which tense has more impact) or the characterization (is this something a black person would say) or the meta (what does it mean when a society really values craftsmanship). THAT is what makes real improvement -- when you open it up and poke at what makes something work and stand around talking about it with your friends. Suzette Haden Elgin called "working on the car together." This works. While it may not be for everyone, it seems much more popular than the classic workshop style.