When I watched E.T. recently I noticed that for every element that was really inspired there was an aspect that seemed slightly off. The kids are all very good for child actors, but the E.T. puppet is stiff and creepy looking. The suburban setting provides an interesting contrast for the extra-terrestrial goings on, but it also doesn't make sense that a space ship could land in a forest that close to a subdivision and no one would notice it. The portrait that Spielberg paints of what it's like to be a child really resonates, but there are several scenes (like the dissection scene) which seem like they were filmed on a different planet. The film is still charming all these years later, but it's got some glaring problems when you look at it with adult eyes.
Lilo and Stitch is very similar to E.T. on a plot level. Both are about aliens landing on Earth who end up getting adopted by little kids who are having trouble at home. Both aliens are being chased by government forces, although E.T. is being hunted by humans and Stitch is being hunted by aliens. Both films are about the small things, like the sweetness and sadness of childhood, against a backdrop of intergalactic magic. But Lilo and Stitch is a much more consistent movie than E.T.
For starters, Stitch is a better character than E.T. because he's animated, meaning that he is capable of a lot more expression and movement than the E.T. puppet was. The extra flexibility that Stitch has really matters when as these duos are exploring their worlds, because it opens the movie up to a host of sight gags that would have been unthinkable in Spielberg's movie. Plus it allows for an incredible range of reaction shots that really sell the comedy or the drama of the scene in a way that wasn't possible in live action pre-CGI. Finally, Stitch's design is also better, because he looks like a koala (so he's cute) but he also has weird fangs (so he's not completely generic), while E.T. has a weird pregnancy belly and leather skin.
It also helps that the world around Lilo and Stitch is more interesting than the world around Elliot and E.T. Stitch's ship lands on a small Hawiian island, which is a problem for him because he's afraid of water and now he's hemmed in by it, but it's great for us, because it gives him an exotic landscape to explore. I get that the suburban landscape of E.T. is meant to be relateable, but the home life is what's relateable; setting Lilo and Stitch in far-off Hawaii doesn't make the movie seem distant because Lilo faces the same struggles for acceptance that a lot of kids face.
Most importantly, I think the emotional throughline is a lot steadier in Lilo and Stitch than it is in E.T. When Lilo first meets Stitch he behaves terribly; he was built to be a monster so he has to be trained to be gentle, and his emotional growth from destroyer to companion has steady progress. In contrast, E.T. has wild mood swings - from terror when Elliot first meets the alien to quickly making him a cuddly friend, to E.T.'s sudden onset of life threatening sickness, to E.T.'s inexplicable healing from that sickness. The jaggedness of E.T.'s script is probably a factor in it's success, because it mirrors the change-on-a-dime nature of a story told by a child while Lilo and Stitch has the well planned out smoothness of a story told by an adult, but as an adult watching both movies I can appreciate Lilo's structure a lot more.
I don't bring up E.T. because there wouldn't be much to say about Lilo and Stitch on it's own; I bring it up because I think Lilo and Stitch has been kind of forgotten in the pantheon of Disney movies because it was released after the early 90's resurgence that made the Lion King such a generational touchstone and right before Pixar completely took over the Disney empire. By bringing up an all-time classic like E.T. and saying that Lilo and Stitch is in many ways more successful than it I'm trying to convey how much I believe in Lilo and Stitch's quality. It's a lot funnier and more offbeat than a lot of kid's movies are, and if you haven't checked it out, I recommend that you phone it at it's home. (That's the exact catchphrase from that pregnant waddling alien, right?)