Elements can only edit images that are in 8-bit mode. Elements has only rudimentry masking, Levels and Curves adjustments.
Most digital cameras capture RAW images in 12 or 14 bit mode and when converted, can be output as 8 or 16-bit files. For editing in Elements the 8-bit color depth would be the only choice available to you.
There are some big advantages to editing in 16-bit mode, one being smoother transitions between colors, minimizing the chances of banding and posterization. The issue is known as color-depth or bit-depth, not to be confused with color-space.
An 8-bit color depth only allows 256 colors per channel (0 - 255).
A 12 bit color depth allows 4096 colors per channel. (0 -4095)
Ultimately, any image has to be converted to the 8-bit color depth for output, computer (web) or print. However, by editing in 16-bit mode many image problems like the aforementioned posterization and banding can be avoided.
For commercial purposes, working in 16-bit mode as much as possible is highly desireable, which for Adobe software means Adobe Photoshop Creative Suite 4 and Adobe Photoshop Lightroom 2 (latest release level 2.6, release 3 is currently in Beta testing). Even better is Adobe Photoshop Creative Suite 4 Extended (scientific and 3D cpabailities) along with Adobe Photoshop Lightroom 2.
Elements has "Photomerge" which is used to stitch panoramic images.
Ansel Adams, one of America's most famous photographers, said 80% of the work he did on his images was done in the darkroom. As new techniques and chemicals became available, he would frequently experiment by making new prints from his negatives. I have 4 different print versions of his "Moon over Half Dome" image that display changes he made in toning materials, print paper contrast, and print developing chemicals.