Are self-signed SSL certificates less secure?

Self-signed certificates can provide encryption just like normal certificates. But it doesn't provide the usual logo. But proper identification is essential for HTTPS, because otherwise it is possible to impersonate the server and the person in a man-in-the-middle attack, which effectively renders the encryption useless.

You can also provide proper identification for self-signed certificates by giving everyone who likes to connect to your site the basic information that they should get the certificate beforehand, i.e. by providing the certificate itself or a thumbprint. Of course you have to do it in a safe way (eg out of band during connection). You should also somehow ensure that others are actually comparing the certificate it gets to the one they expect, rather than simply clicking on it. This works if only a few people will visit the site, but it won't scale with more visitors.

Another problem with not having a certificate issued by a public CA is when SSL listening is done. This is usually a venue in a company, but there are several antivirus products that can do this as well. In this case, sites using unverifiable certificates are often simply blocked by SSL interception and need to explicitly add exceptions.