You have it backwards. On screen buttons allow the screen to be where physical buttons normally would be so that in scenarios where the buttons aren't needed the display can be larger.
Yes but it's only in a few cases like video or games. In other scenarios where you're browsing the web or tweeting, it doesn't make sense. Before someone brings up PIE controls, they're more a novelty item and a gimmick. Sure it can be used but it's not the easiest to use. You might find it easy, but I can guarantee you an enthusiast who's familiar with their phone can hit the soft home button faster than you can bring up your PIE controls. Plus, it's just not a real mainstream solution.
But here's the thing about on screen buttons and phones. We still have bezel (Nexus 4, Nexus 5). That space, if it were Samsung, would've been used for the two capacitive buttons + home button. In such a case, I'd have the full screen for viewing and not lose 7.5% of it to buttons.
Furthermore, let me emphasize that the home button is nice on Samsung phones in that it's a button you can hit to wake up your phone on the front side. You don't have to pick the phone up to find the home button, and it's not as awkward as sticking a finger on the side to wake the phone (that action likely takes another finger to hold the phone to prevent it from sliding). Tapping the home button was a nice way to wake the screen up for me to check notifications.