The answer to the question "Welches Kleid gefällt dir besser?"
I see two different sentence structures to answer such questions: -(Das rote Kleid gefällt mir besser als das weiße Kleid.) -(Mir gefällt das rote Kleid besser als das weiße Kleid.)
What is the best one to use and what is the difference between them?
Both are fine.
I'd leave out the second "Kleid" in both versions. It's not wrong to repeat the word, just not necessary.
I do agree, both are fine. And me too, I would leave the second word "Kleid". Depending on the context in written language I would slightly prefer the first sentence to the second. I am not sure why, perhaps as the first one starts with the subject.
In German you can emphasize parts of a sentence by voice, so meaning is almost independent of the position of these parts. (In your example this may be "mir" or "das rote Kleid")
The first one sounds better to me. I'm not a native german speaker but I've been studying the language for awhile (including off of Duolingo)
Both sentences are correct. It depends what you want to emphasize (this should be at the beginning of the sentence):
"Das rote Kleid gefällt mir besser als das weiße, weil ich rot lieber mag".
"Mir gefällt das rote Kleid besser als das weiße, aber dir gefällt das weiße besser"
As Marie392547 mentioned, "Das rote Kleid gefällt mir besser..." is the more common (neutral) version because usually, sentences start with the subject (wer oder was? = das Kleid) and not with the object (wem? = mir). If you start a sentence with the object the emphasize is always on the object (also compare: "Es geht mir gut" vs. "Mir geht es gut") .