Changing rebound affects the damping on the up-stroke vs. the down-stroke. With 0 rebound, the static pressures above and below the piston are equal, so you get equal damping... ie: 40W up and down.
With more rebound there is more pressure above the piston (which is what pushes the shaft back out). This extra pressure increases the damping on the up-stroke and reduces damping on the down-stroke. It is a subtle adjustment but it is noticable in how the shock feels on the bench and how it affects the car on the track. If I had to estimate the effect, with 40W oil and 100% rebound, I'd put it somewhere around a 1/2 weight difference... around 42W on the up-stroke and 38W on the down stroke.
For on-track performance, my findings line up with Korey's... with more rebound, the car returns to center a little quicker off corners and in chicanes. On longer more sweeping tracks, I prefer less rebound as it smoothens out the car's transitions.
In the bumps.. well, it depends on what you want the suspension to do. The two schools of thought regarding this are:
1.) Increase traction by keeping the tire on the ground. To accomplish that, you'd want to have your suspension trace every bump more closely. You'd run either more rebound and/or less "pack" to bring the tire back down quicker. The issue with this theory is that your wheels will be riding lower in the bumps, so at each bump the wheel will take a harder hit, which reduces stability.
2.) Increase stability by skipping over the bumps. In this scenario, you're going with either less rebound and/or more pack, which allows the wheels to ride the bumps higher, so the car doesn't get upset as much. The trade-off is that you will have less traction since the wheel is in the air more.
If you talk to any off-road guys, they'll go on and on about which theory is correct and why. Personally, I think it depends on where the bumps are, how they affect the car, and what you need the car to do at that point.
Yes, Gordon, our track has a few bumpy sections. Being an accomplished fence sitter, I run 1/2 rebound all around here. It would return to center better in the chicane and the tight sections with full rebound, and it would be nice to run no rebound in the approach to the bumpy 180 for more traction... it skips along the top of that washboard section more than I'd like.