I just wanted to highlight this post about the matte shots in The Love Bug (supervised by Alan Maley, though the king of mattes, Peter Ellenshaw, came back to do some, including the famous shot of Dean Jones' nighttime search for Herbie). The Disney company's determination to do as much studio and as little location work as possible -- substituting the matte department, the Ub Iwerks sodium process, and other special effects gimmicks for location shooting -- was just an extreme version of a common tendency for old-school studio films in the '60s: as the '40s and '50s vogue for location shooting started to recede, older producers and directors were interested in controlling costs by staying in the studio.
Also, I think some producers may have felt that the visual appeal of location shooting had become diluted. Two of the biggest hit movies from 1964, Warners' My Fair Lady and Disney's Mary Poppins, both elected to tell turn-of-the-century English stories entirely on Hollywood studio sets, and while it's hard to know whether this saved a lot of money (especially on My Fair Lady, which was insanely expensive for a film with few locations and a relatively small cast), but it made the films look more distinctive and spectacular than the real London would have looked at that point.
In any case, I think The Love Bug has some of the best uses of matte paintings ever; like those TV shows today that use green screen to fake many locations, it uses mattes in places where you're barely aware of them. And yet the overall effect is to create a San Francisco that is an idealized, misty, magical version of the city -- a place where the crazy story seems plausible. Extensive location shooting (there was some, but not much) would have made the story seem much harder to accept.