One big reason for staying with petrol was supply. Oil refineries were set up to produce petrol and supply lines were adapted to deal with petrol. It's no good having a fuel that produces a higher performance if you can't get the fuel to the user in quantity. For road vehicles in particular the ability to run on any old fuel is a big advantage when you're advancing rapidly across a battlefield.
One must also consider the technology of the engines. Even the Merlin is a large capacity, slow revving and low compression ratio engine. Much of the increase in output power in WWII was achieved by more, and better, supercharging.
Bill is more or less correct. Basic fuel was 80 octane, dyed red, not just for road vehicles but aircraft too. When I was learning to fly on Tiger Moths we ran them on 80 octane fuel supplied by Carless, sadly no longer available. Higher performance engines ran on high octane fuel, known as 100/130. Basically 100 octane, but 130 octane when used in a supercharged engine. The octane rating was boosted by addition of tetraethyllead. Towards the end of WWII some engines could run on 150 octane fuel for increased power with high boost pressures from the supercharger.
The modern certified aviation fuel is 100LL, ie, 100 octane and low lead. It is dyed blue and is better controlled, with less volatiles, than road fuel. When I started flying the Tiger Moth at Thurleigh we ran it on 100LL and it didn't like it! We had at least one engine failure attributed to the fuel where a cylinder dropped a valve seat jamming the valve open. Once Mogas was approved we ran it on 2 star, if anyone remembers the star rating. We used to collect fuel 250 gallons at a time from the local village garage by towing a tank that was welded to a WWII bomb trolley chassis with the wheel rims modified to take Mini wheels inflated to 50psi. Dunno if any of the local coppers ever saw us, but if they did they probably decided not to get involved due to the paperwork that would be involved.
Andrew