John covered almost everything, except for when the bits are useful (aside from Marketing ). The extra bits only real function is that they can help keep a gradient smooth after you perform a change to contrast or apply a curve (for photos, think of skies for large slow changing gradients). For digital painting, overlapping dabs of very-large soft-edged brushes can also show banding and off-color blending artifacts, but you're not likely to use the offending combinations very often.

Elements doesn't even have 16-bit mode, so after RAW conversion, I'm working in 8 bit mode, and it's not really a problem.