Actually is possible and relatively easy to hit a discrete position over a 1024 range with a joystick (the longer is the neck of the stick the more precise you can be) or a throttle (and be steady enough to maintain the value within the jitter rejection range of your controller) Try with Diview you will see that you can be precise to the first decimal of the percentage (even the second if you are good gunslinger
without too much effort if you are not at the center of the stick (where springs do have the most of the resistance) if mechanical parts are in good shape, if this kind of precision is needed that's another story but 256 discrete position can be achieved even by untrained hand for example in MAME you can "feel" the difference between an 8 bit (which theoretically is the native resolution of most of the arcade analog controllers) and a 10 bit (or more) controller by the smoothness of the response because of the aliasing elimination.
Like Audio is better to work with the highest possible sampling rate even when the final products will have CD quality.
Any how i agree that extreme resolution are most of the time overkill, but they come very handy when is needed to use only a fraction of available range.
BTW XBOX 360 pads do have 16 bit (at least my windows PC sees them as such when i check raw values) of resolution on the analog "Mushrooms" that is definitely overkill