Shackrock, I think you're right about combining the tracks on a bus and then applying the effects. I'm not certain about this, but I'm basing this on the fact that my computer keeps up with mixing a lot better if I apply an effect to a bus of 4 tracks than if I apply it to each of the 4 tracks individually.
Another use for busses:
When mixing, I have a set of headphones plugged into one set of outputs, studio monitors on another, a home stereo on another, and a portable "boom box" on another. By sending all my tracks to a bus instead of straight to an output, I can try my mix out on different speakers by changing just one output for the bus rather than going through all 12 or so tracks changing the output.