said by CK3600 :
Thanks. That answers the second question and the whole article is generally helpful. But the first question remains unanswered I think. It seems like the only benefit might be to back up your blog locally.
Realistically it's a bit more than just backing up. You would have full control over every aspect of Wordpress, PHP and whichever web server you would be running. There are plugins and such that require your server to be set up specific ways which aren't possible on most hosting servers as well as not available on Wordpress.com.
It really depends on what your needs are, whether you care if you have full control over every aspect or not...etc. Some people would do it simply for the learning process.
Edit: Seems I misread what you were asking. I'll leave this here though in case it's helpful to someone else --