FWIW I do almost everything in 8 bit and sRGB because when there are no major tweaks involved it's better than good enough.
I think I can see a difference between the same conversion applied to an image to make it mono in 16 bit as opposed to 8 bit, so allow me my illusions
The blue sky thing is definite though.
Most cameras produce, I believe, 12 or 14 bit RAW files. so that's 4096 to 16384 shades of any one colour. Although I bet Jonathan's state of the art stuff does the full 65536 trick.
Now who wants to start on colour spaces?