What does cutting parts off of creatures accomplish?

I was watching a stream today and according to them,

  • Chopping off body parts can have a combat effect (e.g. Gnasher's tail can no longer be used for combat once chopped off, obviously)
  • Chopping off body parts can have a loot effect (i.e. Copping off parts drops an orb of some sort that gives you a generic loot item from the monster).
  • There is no apparent effect or bonus for not chopping off a body part.