What is the point of these bags? Dont they take up more room in a suitcase?

I spend 150 nights+ a year in hotels. Cubes are a lifesaver. You can pack more into a suitcase with them , and TSA can go through your bag without fondling your clothes. Once at your destination, move the cubes from case to drawers and you' unpacked.

Wouldn't these be a bit more useful if they the set came in 4 colors to help more rapidly identify them?

YES! You'd think assorted colors would be the DEFAULT option given what these are used for. Maybe they're hoping you'll buy a 4-pack of each color, but I really can't justify that many.

Has anyone tried to wash these? I've seen other similar products washed and the review photos show them being very damaged afterwards.

I washed them as soon as I received them -- they came through fine. I think I put them in a laundry bag on the Delicate cycle.

Are the various sizes useful? Or is one size superior to the others?

Various sizes are useful to pack one type of clothing, undergarments in one, socks in another, pants in another, however same size bags come in handy for you to plan outfits for long trips and just unpack one outfit a day, that’s what I do anyway:)