Bounce vs. Clone vs. Apply Audio Effect

I think the only reasons you should bounce/apply is when you want to reduce the drain on the processor. If you have a lot of effects or synths, that uses a lot of processing power. Bouncing tracks or applying effects allows removing the effects and synths.
Or if you've reached the program's limit of synths and/or effects, as in Music Creator.
Or if you don't have a super-powered computer with tons of RAM.
Cloning, I only do on some MIDI tracks if I want to use the same melody but a differeent patch.
 

I don't have X1, Mike, but in my experience with bouncing, the original track with all the edits, envelopes, effects is untouched. You just end up with a track that sounds like the original, but doesn't use up as much RAM as the first track did.
You can then Archive the track which removes all the effects from processing, and you can still unarchive later if you want to make changes to it.

I bounce when I want to lower the processor load by shutting down some synths. After the bounce, I can delete or archive the synth track and work with the audio which is less processor intensive. This is important if the project has a bunch of midi/synth tracks and or heavy CPU intensive FX in it. Bouncing and or freezing can ease that strain and load. I would probably opt to freeze it since freezing does the same thing as a bounce but doesn't create more tracks to clutter the screen and cause confusion. 

I use PROCESS AUDIO> APPLY quite often..... it is, as some point out, a bit on the destructive side....if you shut down and then restart. I found that I can undo as long as the undo is saved in memory but it does get scrubbed when a shutdown occurs. 

I use this ALL the time with melodyne..... I edit and click save as I work until I reach the end of the track...I click save again.... then I listen through the track several times to be sure I have everything right...then I select the track with melodyne being careful to highlight JUST THAT TRACK and all the clips in it...then I Process Audio> Apply FX and let it roll.  It applies the melodyne edits permanently and removes the plug in and I am now left with the track printed to audio.  

My guiding theory is that I do not want or need the old out of tune track anyway so overwrite it with the tuned one. If I missed something....I simply reinsert melodyne and just load that one small section, fix it, process it and go on. Melodyne only touches what you touch, so nothing except that one or two notes gets edited. I use this method all the time with melodyne.

I clone only if I feel that the editing I'm about to do might screw up the track and want a safety net to fall back on. I clone before the edits. And I will delete one of those tracks when I finish. No need to have 2 tracks of the same thing. If the edit was successful, it stays and the original gets deleted.... or vice versa if the edit failed. 

I might work a bit different than some folks here. I'm not afraid to make destructive edits as they are called. I don't fear losing a track because I can generally redo it in a very short time. 

Yesterday, for example, I was working on some guitar and vocal tracks.... I had old ones in the project that I was't exactly happy with ..... I mean they were OK and totally satisfactory but I wanted something different. I clicked the guitar and deleted the tracks and then recorded new ones.... same thing with vocals. Most of the vocal tracks in my songs are one shot takes.... I run through it a few times to get warmed up and hit record and go for it. I don't spend hours on the tracks.

Of course, that's just me, and how I work.