Edit: Erm…that turned out a “tad” longer than i thought. Sorry for that. Dont be put off by the formula in the middle…no need for math, just added it to illustrate the complexity of sRGB 
Hey there,
just to put a few things straight. There are a lot of ppl that get along without LWF just fine. And if you yield the results you want/need there’s absolutely nothing wrong with that. There are quite a few very different reasons for LWF.
To answer your question pailhead, float is a must for LWF, but NOT because of clamping or values above 1. A floating image can also be clamped to 0-1 and STILL be perfectly Linear and STILL be way better than a non floating image. Keep in mind that the BIGGEST advantage of float images is not values above 1. I consider that as a nice addon. The real advantage is higher color precision (you get more values between 0-1 than between 1-Infinity with floating point math btw hehe).
The reason float is a must for LWF is indeed this higher color precision as you would be lossing a lot of color precision on the PERCEPTION side of things in linear colour space. The whole idea of sRGB is to have better colour precision in the brightness range that is best percieved by the human eye without needing more space (both memory and HD wise). With floating point this is not only not needed, but also introduces quite some issues.
One of the reasons for LWF in the first place (during rendering) is different distribution of Light (for example the often observed strong colour bleeding and similar effects). While this is perfectly fine if you are either just starting with 3D or after getting used to it, it mostly puts of 3d artists in the first place because they are very used to working in sRGB space and their workflows/“default settings” all of a sudden dont yield the result they are aiming for. One thing ppl seem to have a very hard time with it that they have “too few blacks”. So if you choose a dark grey it is brighter with linear workflow…and that standard colour value for black plastic all of a sudden doesnt work at all anymore. Having float precision you can rest assured tho that there ARE enough blacks 
Moving on to the post (be it PS, nuke or whatever tool you use) sRGB poses different issues (and hence different reasons to use LWF).
There are quite some cases (facing them everyday in fact) where calculating in sRGB simply creates WRONG results. This may not be obvious when doing tweaks to a finished beauty rendering but they pop up everywhere if you do more complicated post like rendering in layers, seperating elements etc. Can you say “fringing” ? 
Generally linear is actually the EASIER and more logical approach. sRGB is a pretty crazy hack if you think about it. The idea of a fully linear pipeline is simply to keep your images “as is” through all stages.
Just read up on the Gamma curve that sRGB really is. It is not a simple gamma 2.2 in reality. Put simple it is a linear segment between 0 and 0.04045 and a gamma 2.2 segment between 0.04045. What kinda wacky unpredictable hack is that ? (The reason is to prevent the curve from becoming perfectly horizontal at 0 btw).
Here’s the corresponding function:
v < .04045 ? v / 12.92 : pow((v+.055)/1.055, 2.4)
Not exactly straight-forward is it ? 
I just wrote this to explain that Linear is actually easy. 1 is 1, 0 is 0 and 0.5 is 0.5 period.
Now the problem is that all monitors have their sRGB correction built in and you have to feed them sRGB luminances in order to see what you are really doing. This is what the sRGB button in the VRay VFB does and what an sRGB Viewer LUT does in nuke.
So on the practical side this is what LWF boils down to
- Input images like textures either need to be in linear space or corrected on load
- Colours need to be set in linear space
- Rendering is performed in linear space
- The image is PREVIEWED using an sRGB viewer correction but SAVED linear and in floating point
- Post production is PREVIEWED in sRGB again, but all the math (be it grading or transformations) happens in pure linear floating point.
- Final output is determined by the format and target. So you’d output to sRGB for jpg, QT, AVI etc. but might stay linear for your internal final rendering.
That’s pretty much it. Sorry for the long post, and if i fubared things somewhere feel free to correct me!
Regards,
Thorsten