I recently found an old post where JimH asked me to to describe my reasons for using multiple libraries.
After I had been using MC for several years, I felt the need to have more than one library. I understood JRiver's usual advice to keep everything in one library. I was certainly aware of the disadvantages of having to switch between libraries. However, I felt that having more than one library made sense for my needs. Here is a description of each library with my reason for that library:
1. My permanent music library. The production copy of this library resides on a desktop PC dedicated to music playback. (MusicPC.) Music that I buy as CDs or downloads go into this library. Music gets added and is not deleted. I may fix an tag error for files but otherwise, the contents stay the same once I've got the tags right. Over the years, I bought a lot of CDs and spent time ripping and tagging them. I don't want anything to mess up this library that I put so much effort into. Especially human error on my part.
2. Other music - concert recordings mostly. Some of these recordings are worth keeping and some are not. I want to keep them separate from my permanent collection of recordings. Also stored on the MusicPC.
3. Car music - I bought an 80 GB iPod to store music for playback in our cars on long trips. This music was selected from the permanent collection and modified. The browsing features of the iPod were marginal for classical music so I to change tags and the music itself. I combined all movements of classical music works into a single file so that the work would play properly with the iPod's shuffle play. I rearranged tags to fit the iPod's limited browsing capabilities. The way tags are used in this library is not compatible with the files in our permanent music library. The differences make it more trouble that it is worth to keep those files in the permanent music library. Also stored on the MusicPC.
4. New rips - I initially rip and tag CDs and edit downloads to get the tags right before I add the files to the permanent library. Two versions of this library reside on my MusicPC and on my Personal PC so that I can rip and tag files on either PC. Neither library contains permanent music files.
5. Initial image library - This contains photo image files from our trips and other outings. We take lots of pictures - mostly nature subjects such as wildflower/insect pictures and wildlife pictures. When I add a set of pictures to this library, I delete clunkers, ID the subjects and edit tags. Then I pick some winners, edit the images and write them as Jpegs. Lots of activity. At present, this library lives on my personal desktop PC.
6. Permanent image library - I expect to set up a separate image library to contain image files that have been selected, edited and will be kept permanently. I want to keep these files separate from those files that are still being tagged, edited or deleted. My reasoning is similar to that for my permanent music collection; I don't want the images we worked hard to get and can't replace to be lost because of human error. This library and its files will be accessible on our LAN.
I do have good backups but they can't protect me from unrecognized human error. I have other copies of the permanent music library on my personal PC for use in beta testing. No messing around with the production copies of my permanent libraries.
I am aware of MC's facilities for syncing with a portable music player. I synced from the car music library to the iPod.
In summary, I use multiple libraries to isolate permanent content from material being edited or transient material and to keep incompatible material in separate libraries. I've used MC for almost 9 years and have not had any real problems with lost content or messed up tag info.