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A high resolution encoder allows better velocity feedback
so you don't get "crunchy" feedback/motion at low speeds.

This is especially important with absolute encoders as you do
not get time stamps of count events like you can with normal
quadrature encoders.

Returning the encoder count to LinuxCNC if the drive has local
feedback is mainly useful if the feedback is from linear scales. 

Gents,

have a question on those famous cheapish AC servos form Aliexpress. Most of them are 17-bit absolute encoders. Correct me if i'm worng - this means it has 17-bit resolution per revolution? 1 / 131072. What for? is there any advantage of having such a big resolution per rev? i can imagine belt drive involed in drive - the slightest tension change in the belt under load will lead to position vs command discrepancy and force the motor to react. I think it will make the system nervous unless you set some parameter like dead band - but then why use such a big resolution?

Have anyone of you used those servos with Mesa cards and used encoder feedback from driver to Mesa?

Bit confused.