Some years ago I bookmarked a good site detailing some benefits of running standard user (or "limited user") accounts, and it seems to still be online. It has articles written by Microsoft software engineers among others:
http://nonadmin.editme.com/WhyNonAdmin
There was a link to an article that I thought had a very good summary about why running with admin rights is bad and running with a standard user account instead is good. I will quote the article:
Quote
Even if you keep up to date on patches and virus signatures, enable strong security settings, and are extremely careful with attachments, things happen. Let’s say you’re using your favorite search engine and click on a link that looks promising, but which turns out to be a malicious site hosting a zero-day exploit of a vulnerability in the browser you happen to be using, resulting in execution of arbitrary code. When an exploit runs with admin privileges, its ability to compromise your system is much greater, its ability to do so without detection is much greater, and its ability to attack others on your network is greater than it would be with only User privs. If the exploit happens to be written so that it requires admin privileges (as many do), just running as User stops it dead. But if you’re running as admin, an exploit can:
install kernel-mode rootkits and/or keyloggers (which can be close to impossible to detect)
install and start services
install ActiveX controls, including IE and shell add-ins (common with spyware and adware)
access data belonging to other users
cause code to run whenever anybody else logs on (including capturing passwords entered into the Ctrl-Alt-Del logon dialog)
replace OS and other program files with trojan horses
access LSA Secrets, including other sensitive account information, possibly including account info for domain accounts
disable/uninstall anti-virus
cover its tracks in the event log
render your machine unbootable
if your account is an administrator on other computers on the network, the malware gains admin control over those computers as well
and lots more
I will add another example: what if you're browsing one of your frequently visited sites but it has been hacked and is now serving malware? If you were running as admin, and the malware was so new antiviruses don't yet detect it, guess what will happen... That's where running as standard user can limit the severity of the threat:
To paraphrase that quote,
if you're running as a standard user, an exploit...
- cannot install kernel-mode rootkits or keyloggers to hide itself and spy on you, only user-mode malware that is much easier to detect and destroy
- cannot install or start services, or disable them
- cannot install ActiveX controls or addons
- cannot access data belonging to other accounts (so your kids on their own account cannot screw up your account and its files!)
- cannot cause code to run whenever anybody else logs on (no system wide infection of all user accounts), it can only infect the standard user account itself
- cannot replace critical OS or program files with trojan horses or other malware
- cannot disable/uninstall/terminate security software like antiviruses or firewalls
- cannot cover its track in the event log
- cannot render your machine unbootable (by deleting critical system files, for example)
- cannot gain control over the entire network
Standard user is great.

It isn't infallible, and there are evil things malware can do even to a standard user account, but it's many times safer than admin accounts. And it helps against human error, too: what if you or your kids accidentally delete some important system file that you need - well, you can't do that with a standard user account, as only admins can delete system files. Some software is coded so poorly it doesn't work right with standard user accounts, but those are getting rarer all the time, and personally I prefer not to use such software (if they are so poorly coded they don't work with standard user rights, who knows what security vulnerabilities they have). And some software just isn't meant to run as anything except admin, like any software that does system maintenance work: defragging, checkdisc utilities or installing software and such. For those cases, you have to log in as admin for the moment, or use Run As.
I would recommend anyone running Windows XP/Vista/7 or any modern operating system to transit to using standard user accounts for daily browsing and working, and to only use admin accounts when it is absolutely necessary. It may feel a bit awkward at first, but it's a great security benefit.