Adventures of Sonic The Hedgehog was made for syndication. I believe that in order to quality for Syndication a TV show had to have a minimum requirement of 64 or 65 episodes... So Adventures of Sonic The Hedgehog was produced on a much smaller budget per episode, has worse animation and nonsensical stories overall.
The separate Sonic the Hedgehog SatAM series was produced by ABC for their Saturday morning cartoon block. It did make it to two seasons. I don;t know what the reason was for ABC cancelling the show after two seasons? But this show had bigger budgets per individual episode and yeah, they were going for story arcs and a much more cohesive story overall.
Also, don;t forget about DiC's third entry into the Urkle-Sonic universe, and I think it was meant to be a borderline continuation of Sonic SatAM, even though Sonic has a Sister and a Brother (all voice by Jaleel White) and they are all in a rock band, and looking for their long lost mother, or some shit. I really don;t know, I tried giving Sonic Underground a chance. But I could never make it past the first few episodes.
I think because there was 40 episodes, it was meant to be bundled with SatAM for a 65 episode package. The cartoon was released around the launch of the Dreamcast and Sonic Adventure.
I remember watching SatAM when it originally aired on ABC. I kinda liked it for its day. The Adventures of Sonic the Hedgehog was too ADD for me. Bu the time Sonic Underground came out I was 18, and 18 year old me was like 'nope'.
I am still surprised that DiC managed to get three series (and one VHS movie) out of Sonic the Hedgehog.