... So it begs the question about why a four function decoder would be preferable for this unit and whether sometimes basic functions are good enough, especially at this price.
Maybe I'm missing something?
The "Bachmann 4-function decoder" is mostly a reference name for an apparent version with a programmable speed table, versus just a Vmin value. When you poll the decoder with JMRI, once determining it's a Bachmann decoder, it asks you to select between the 2-function and 4-function versions. By selecting the 4-function version, the decoder responds with access to speed table CVs, as well as a bunch of headlight options beyond the dimming functions of the 2-function. The objective here was mostly to find speed tables or similar, and see if they made any difference. We (I) went down a primrose path thinking it might have had this programmability, but in the end it was evidently due to JMRI uncovering firmware quirks in the apparent 2-function version.
The four light functions is mostly a moot point - it's just a way of ID'ing a decoder version. (I could make the argument that having a 3rd light control for a gumball flasher would make sense for UP, but I have yet to find a pic of any of their S-whatevers with a beacon. However, Santa Fe definitely did. Hmmm.)