SetTexture: Stages? What use?

I was wondering what use the texture stages are? DX help files just say:

Stage identifier to which the texture is set. Stage identifiers are zero-based. Devices can have up to eight set textures, so the maximum value allowed for Stage is 7.

But what good does that do me? I always use SetTexture(0, x). What use does this feature have?

I'm looking for ways to speed up an application that has a lot of SetTexture and DrawPrimitive calls every frame with no real way of sorting them better. Can this be used somehow to decrease the number of times a texture is changed? I dont understand.

(Side Question: I've heard that using smaller textures is easier on the renderer, but if using something like Bi-linear filtering, wouldnt that make smaller textures slower? Does this really affect performance much?)
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