I'm going to take your post in parts, because I personally believe it's a multi-part consideration:

I'm not sure when it is a good idea to bus instruments together

In general, it's a good idea to bus instruments together that are controlled as a group where there are one or more tracks needing to be controlled as one. You'll notice I said one or more and not two or more. Well, if you have a simple mix and only have one bass track, for instance, you might still want to bus it if you mix in stages, from the front of the mix toward the 2 bus, and like the ease of all your major stem elements being in one place and easily controllable without having to go back through the track faders. But it's especially a good idea when you have multiple tracks representing a single element of the mix, or even a sum bus for multiple buses where you want to effect those buses individually but control the final level and dynamics in one place. TL;DR - Bus things to make your life easier and to apply group processing. If you find yourself adjusting two track levels on the track faders irrelevant of respective mix to one another, you need a bus. If you have two tracks that you want to process with the same effect but don't want to replicate that effect on two channels, you need a bus.

and apply compression and other group effects.

This ties into the above, but in general you approach bus effects differently from track effects, but you approach them also in the same way you approach any processing. Does it need it? If yes, apply. If no, don't. More often than not, you should fix problems on the individual track level if necessary. If you've done this, you will find that your bus processing will be more of a sweetening thing you may want to apply to the group as a whole. You might see engineers adding a particular compressor here for "glue" on a drum bus, for instance, but by no means is this a default operation for all buses and elements. For me, I approach buses as a character area when it comes to processing. I "fix" furthest toward the source as possible, and sweeten at the bus forward to the final master bus.

do I get rid of all the individual tracks and let what was sent to the busses become the only output of those instruments, or are they just added to the existing mix?

Not sure what you mean here, but you'll definitely want to keep your tracks intact so that you can go back to them and adjust if needed. Routing your track outputs to buses means they aren't going to the 2 bus, but to your buses. You're not creating additional outputs unless you're making sends to other buses where your tracks have a percentage of output on their own, in addition to the send bus. If you're just outputting tracks to a bus, all you're doing here is summing multiple tracks to a bus, which is then outputting into your 2 bus (master bus). The only difference that may occur is within your gain staging on those buses versus outputting straight to the master, via either processing on those buses or gain and volume changes.

Reiteration:

Bus things to make mixing easier (and this also has sonic implications, see the sweetening part I was talking about).

I look at it like Object Oriented Programming: If you find yourself doing the same thing more than once, create a function (the thing you're doing multiple times) and an object to call that function. In this case, the bus is your object, and the processing you put on that bus is your function that you want to apply to all the tracks that you'd like to have that function.