Great topic!!
I've read that the Beatles could not generally read and write music in a formal sense and their recording artist peers were underwhelmed by their technical ability on their instruments. Obviously, to me at least, though, there are other more fundamental musical gifts than technical ability, and the Beatles' singing (except for perhaps Ringo), including harmonizing, and songwriting and musical creativity, depth and curiosity were of the astonishing world-class talent variety. You can hear it on the things they do on their instruments, even if it doesn't sound that difficult, it was immensely creative, tuneful, and unique. The pinnacle of all that would be Abbey Road and Sgt. Peppers, IMHO, and then you've got the White Album, Rubber Soul, and Revolver.
OTOH on a more pedestrian level there is a degree of technical competence that is okay or fine for live music but is just not going to cut it for recorded music. I would say even most professional musicians who are competent to play a live gig will show too many rough edges for recorded music. I can easily get into a mediocre group that plays with good feeling live, but in a recording it's all got to move up a few notches to make it, IMHO.