Yes, on-set audio is often used if possible. Re-recording is a bunch of extra work (you need to pay your potentially quite expensive actors for), needs matching

Yes, on-set audio is often used if possible. Re-recording is a bunch of extra work (you need to pay your potentially quite expensive actors for), needs matching, might not be as "in-the-moment" as the original, ... But re-recording is of course done where needed.