There is a slight false premise here, which is that, in the Royal Navy at least, there were about as many warships with more than two funnels as with one - every older destroyer, most of the cruisers, the three battlecruisers and the King George V class of battleships. That said, there were advantages and disadvantages to each funnel layout. Generally speaking, one funnel gave advantages in concealment, two funnels had survivability advantages.

The main advantage of a single funnel was that it reduced the silhouette of the ship. This made it harder to see the ship, especially in low-light conditions. This was a particular advantage for destroyers, which relied on relatively close-ranged weapons. One funnel also made it harder for an external observer to determine the ship's course. To do this required the observer to measure the angles between two uprights on thie ship. Having two funnels gave two such uprights. A single funnel did have disadvantages, though. To combine the uptakes from multiple boiler rooms into a single funnel required trunking, which added extra weight. It also took up a lot of room, and made any spaces the trunking passed through inhospitable to the crew. To reduce this, you could use fewer larger boilers. This brought its own set of inconveniences. Larger boilers were slower to heat up, meaning that the ship would be slower to accelerate. It would also make it harder to keep the boilers clean, a major necessity to ensure that the ship could keep its speed up. With fewer boilers, shutting one down for cleaning would have a greater impact on the ship's speed. Finally, a large single funnel took up more space on deck, which could reduce the space for the secondary battery and other weapons. The Royal Navy initially preferred a single-stack design for the King George V class battleships, but the decision to adopt a more widespread layout for the ship's secondary battery forced the choice to use two funnels.

Two (or more) funnels meant that the ship could be more easily subdivided, increasing the survivability of the ship. In the late 1930s, the Royal Navy and United States Navy adopted what was called the 'unit' system. In this, the boiler rooms and engine rooms for each shaft were grouped together, with the boiler rooms and engine rooms alternating. This meant that if a torpedo hit the ship, it would not take out all of the ship's propulsion; the more separated boiler rooms had a greater chance of surviving. Two smaller funnels made armouring the ship easier; as the uptake could not be blocked, the funnels were protected only by an armoured grating, a vulnerability in the armour. A final survivability advantage was that two funnels made the design of the air intakes easier. With one funnel, there was more of a risk of exhaust gasses being drawn into them in the event of damage, which would reduce the effectiveness of the engines. However, two funnels could also take up more deck space, albeit more widely spread, than a single funnel. Two funnels could also creaste issues with backdrafts bringing smoke into the bridge structure. This was a problem with the British Queen Elizabeth class in the years following WWI; these ships were originally designed with two funnels, but these were trunked into one during their post-WWI refits due to this issue.