Separated categories work great IF (and only if) you have a large number of people entered.
Smaller races (e.g. the frequent 3R events) run with everyone starting together. Much better to have a multiple category race with 20-30 people than four races each with 4-6 people.
Also, for chase races (D’s start first, C’s later, B’s after C’s, finally A’s) where each category is trying to catch the slower one ahead of it, having the coloured bib’s will help to identify who is who. You get some information from the rider list, but past a dozen people it is useless.