Some users prefer to use the smallest space that will cover the gamut of the image so as to decrease the spacing between adjacent levels and avoid banding. With a 16 bit matrix file, there are 2^16 or 65536 levels. I don't know the size of the C1 tables, but many table based profiles contain around 2^10 or 1024 levels. People who worry about banding in a 16 bit ProPhoto file (gamut volume 2,897,221 ΔE^3) readily accept 1024 levels in an sRGB table based sRGB profile (gamut volume 832,870 ΔE^3).
The real question regarding the necessary precision is the resolution of the human visual system. If a combed histogram has gaps that are not resolved by the eye, there will be no banding. The Digitaldog's ΔE calculations show no significant difference between 16 bit sRGB and 16 bit ProPhotoRGB. With 16 bit gamma encoded files, precision is not a significant factor except for HDR files, where precision does limit the DR of the space. For details on HDR precision see Greg Ward.
Bill
I'm not sure that the volume of a color space is particularly useful in calculating the required resolution.
But using a very crude approach, if you have 8 bit then it can resolve 256/256 = 1 (on the a* axis say). This is a dE which is not noticeable to most of us, but there is the potential that this could grow with repeated adjustments to something that is, so 8 bits is really not enough.
With 16 bits you would have 256/65535 = .004 which is absolutely not noticeable and even with multiple adjustments is unlikely to ever cause a problem even when using the full Lab space.
For HDR images 32 bits are normally used so I don't see why there should be a resolution problem there either.
So I think it's entirely fair to say that with a matrix-based profile that the color space is irrelevant as far as resolution is concerned. Use ProPhoto with impunity, if you wish.
With a table-based profile we have a different problem because it is not continuous. A translation from one space to another then requires interpolation and this will inevitably introduce errors - more with 8 bits than 16 bits, but errors nevertheless. So we need to make sure that we have a very large table if we want reasonable accuracy. But, at any rate, this is why it is generally better to use a matrix-based profile as a working space, especially if the destination is also going to be matrix-based.
So the issue, if there is one, with using large-gamut matrix-based working spaces is not one of resolution really, providing we work in 16 bits. It has much more to do with the fact that we will not be able to see the whole of our image if some of it is beyond what our monitor can display or printer print.
If we are happy to work with this situation (using soft-proofing to see where there are potential problems, if we are wise) then that's fine. Personally I am not fine with that as I want to be able to see what I am doing and not just have a warning that these bits of the image are not displayable, or printable. As my monitor is 100% Adobe RGB, Adobe RGB is the natural choice for any image that is going to print (unless I know that there are particular colors that I absolutely want printed and I know that my printer can print them, in which case I will probably use ProPhoto ... but this is a very rare situation for me). For the same reason, if I am preparing an image for the web I prefer to work in sRGB and set my monitor to sRGB at 6500K because then I am working in my target color space.
But at any rate, it seems to me that if you know what you are doing then one color space isn't better than another: it may be more suitable for a particular image and workflow, but that is all. If you don't know what you are doing then the advice really has to be sRGB because that is the color space least likely to cause problems at the destination, whether this is the web or a home-printer.
Cheers,
Robert