You can calculate the value of an option free bond or swap by using the spot curve and discounting cashflows accordingly. Alternatively, apparently you can use a single-factor short rate model in a binomial tree as you would for options.
Can someone explain why we refer to using short-rate models for pricing option-free instruments? For a swap, for example, I've seen the fixed side get valued by discounting cashflows, and the floating side estimated using the current curve and then discounted, to arrive at a value.
Is it that short-rate models allow you to add flavor to how the rates may move, and therefore assume that you're not stuck with symmetric volatility around each point on the curve? Is the short-rate approach superior to the estimate and discount cashflows with the current, static term structure?