There's rarely a sector obsessed so much with novelties as our advertising and design industry. Yet there's also rarely a business sector being so trapped in the past and clinching to old »truths« as ours. One of those traditions is the EPS file format. Many colleagues still consider (and use) it as the standard for embedding and exchanging everything in everything else.
Actually the file format hasn't been updated in this millenium. What's standard nowadays and where the fun is, is not supported in EPS: ICC color profiles and transparency.
Someone might contradict and say that an EPS saved from and opened again in Illustrator shows transparency and is fully editable.
That's brought about by the way Illustrator saves EPS (as well as other exchange formats). Most people probably know the option »Preserve Illustrator editing capabilities« when saving a PDF. When you check it, Illustrator embeds a complete AI file into the PDF (which effectively doubles file size).
Same thing happens when you save an EPS. Only you can't deactivate it, the AI part of the file will always be saved. Once you open that EPS in Illustrator, the software actually opens that AI part. You only get to see the EPS part when you open the file in any other software than Illustrator or when you place the EPS in Illustrator.
Which leads us to the selection of the EPS version. This selection actually doesn't affect the EPS, since there has never been a version higher than 3. It rather affects the version of the embedded AI part of the file. With Version »Illustrator 10 EPS« it is saved in a way that it can be opened with Illustrator 10. Objects will be converted into something that can be edited with that version. Some brushes, some kinds of transparency and some effects might still be editable afterwards. Also text stays editable under certain circumstances (e.g. it mustn't contain ligatures), although text objects often get separated into their molecules – that is single letters.
The EPS part of the file can also be opened with resp. placed into lower versions of Illustrator. In the EPS part of the file everything is expanded that's not part of the EPS specification, which is pratically everything apart from basic strokes, basic fills and very basic gradients.
In case what you're after is saving a file for maximum editability, just selecting EPS might not be enough. You probably need to do various tests, for instance FreeHand can't even open EPS 10. Corel Draw from X5 up on the contrary can interpret an AI CS4 remarkably well.
What is EPS good for then? You actually only need it for compatibility with e.g. some highly specialized software in the gravure or plotting area or as lowest common denominator for exchanging very basic drawings with software that doesn't read/write anything else. Some 3D software or some font editors belong in this group.
Unfortunately most microstock agencies insist in providing files as EPS 10, although the format is practically of not too much use. On the one hand this »version 10« is only present in Illustrator, on the other hand saving to this format still ruins so much in the file that even in Illustrator it's practically ineditable.