Yeah, traditional optical mice have been 400dpi, newer ones up to 800dpi. Even higher end mice (usually marketed as gaming mice) offer 1600dpi and higher.
Of course higher dpi mice can be just as useful to workstation users operating with super high resolution monitors. I can imagine how annoying it would be trying to fumble around on a 30" LCD (2560x1600) with an old 400dpi mouse. Sure, you could turn up sensitivity and even use acceleration but then you run into software interpolation problems and thus lose precision and accuracy.
For gamers, dpi comes in handy as a hardware sensitivity adjustment (avoiding the software interpolation problems I mentioned be for) that can also be very fast to adjust (jumping from 400 to 800 to 1600 dpi by simply pressing a button). Operating at a higher dpi for general movement and then quickly dialing it down for precision movements.