The reason for the whole "DPS War" is gamers. In general usage you don't normally need to move the mouse that quickly and accurately. Moving the sensor won't help with that. They'll still need a very high resolution sensor that takes lots of snapshots very quickly. You can work out how accurately it will track if you know what sensor is actually used in your mouse. Most of them aren't that accurate at high speed.

At the end of the day, how many DPI it has is used as a numeric measure of how "good" your mouse is. Same as the old more MHz = better idea.

I've got a Logitech MX Revolution and it works fine for me. It is apparently 800 DPI from what people who have opened it up and checked the sensor have said. The sensor is roughly where the end of your thumb is when you're gripping it i.e. about 2/3 from the bottom. You can disable all the extra buttons if you want from the software.