Point fighting and sparring can be a lot of fun. It teaches timing, angles, footwork, breathing, blocking and striking. It's a great workout and adds a dynamic training experience not always found in other areas of the martial arts.
These are the obvious benefits.
A word of caution though. Point sparring should only be one part of dynamic training. The danger lies in doing too much of this one type of sparring. If we become accustomed to getting a point and the ref stopping it, we program ourselves to stop after landing a technique.
One of the truths in the martial arts is that you will fight as you train. This is the reason we tap when a technique is applied. If you said 'Ouch!' or 'Stop!' instead, you'd train your subconscious to release when a real opponent cried out. This is why it is also important not to release a technique completely when your partner taps. Just back off on the pressure or technique but remain in control, able to increase the pressure again if needed.
Point sparring is great, but you need to include other forms of dynamic training. In our club we do what we call continuous Jiu Jitsu. One person throws, grabs, strikes or kicks and the other defends, then without a break the original attacker has to respond to the defense.
Another excellent tool is to start in a more traditional sparring situation. Instead of stopping when a point is landed, have it lead into technique. This method teaches all ranges of combat and more accurately depicts how a real encounter might happen. You start at long range and practice how to go from someone attacking you at distance to moving in and taking control and striking, throwing, applying a joint lock, or doing a take down. You cover the long range, medium, close combat and ground fighting. The key to this is not to have preset attacks and defenses.
This is similar to Randori, which is another extremely important training method that includes multiple attackers. See my previous post on this topic here.
All types of training are good. As with so many things in martial arts and life, finding balance is key. Know what you're trying to accomplish with your training and make sure you have a mix of different experiences. Learn from each different training method and realize their strengths and weaknesses.
Generally, the more rules there are, the less combat effective the training is.
One of the best things I read (and I can't remember where or I'd give credit) was a Sensei that told his students "We don't train for tournaments, we use tournaments to train." This showed me that the Sensei understood the value and the weaknesses of this type of training.
I'll say it again, you will fight as you train. So make sure you training remains focused on your ultimate goal, whatever that may be.
Train smart, train effectively.