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I cover mine in the garage. I've always been surprised how much dust gathers on the cover over time. Of course, I'd rather have it on the cover than on the vehicle.
Yep, simply to reduce the odds of it getting rubbed or scratched by someone walking by. Current cover has a super soft fleece-feeling underside, but I have used fleece or flannel blankets in the past.
I also cover mine in the garage. Mainly to protect it from bumps and scrapes, and to keep dust off. I spend a lot of time tinkering, which stirs up more dust than I realized. I hate cleaning the windows, so the less I have to do that, the better.