I can't answer for the "typical home user"
I do know that certain applications (e.g. my ATI video drivers) require the installation of NET before they can be downloaded from the website. That's the reason I installed it on my systems (I have two ATI cards) and the only reason. I suspect that other apps may also require it for whatever reasons.
I also understand that some game require installation of NET in order to be played (I guess online). I don't game, so I don't know.
Regarding versions, you only need install the latest version, after removing the others via Add/Remove Programs.