Right now:
Is there really any advantage in having a server instead of just pointing to the repository directory?
For example: instead of commiting to svn://localhost/projectname, I could just commit to C:/development/projectname and get away with it.
Could someone advice me on what the best practice is in this kind of senario?
No, in that situation it is not necessary to run a Subversion server. You can tell TortoiseSVN to access the repository files directly (using the file:// protocol) and everything will work fine.
However, using a separate server will make your life easier if you: