First off, the main reason for the center diff on a 1/8th buggy is for brake bias (different brake rates for front and rear). This is impossible if the center diff is locked. From what I gather in this regard, you set the brake adjustment so that there's more brake action on the rear than the front. this is so the front wheels don't completely lock up at full brake, but the rears do (or nearly so). If they're set up like this, getting it to enter a powerslide is much easier and the loss of steering control at full brakes is lessened.
But, if you're bashing you might not need this feature. I run 100K in my center diff on my lightning and it does OK by me.
As to why you'd lock the diffs, the main reason would be if you're rock climbing with a MT. Even 30-50K silicone will allow the diffs to spin the wheel in the air and not let ya rock crawl. I have read about crawlers that lock all the diffs. This would let ya crawl like a tick, but steering at anything over a crawl pace will put undo stress on the drive train and make it steer like a brick.