I mean, Titan Quest’s damage boost was kind of retarded. The most bonus damage you could get was (iirc) 60%, and it also had no separation if we talk about DoTs. The problem was, not many items gave enough damage to be able to focus on that (you still could focus on damage only, having no defense because items didn’t really provide defense stats if they already gave damage). There was also no damage tab, you could not check how much damage you deal and what damage type you’re already best at (still had DPS stat, though). I don’t know how it is in Anniversary edition, I just played it for around 2 hours because I was showing it to a friend and saw some massive changes in the interface, but still no damage tab.
In my opinion, separating e.g. Frostburn and Cold is a good idea, because you may choose between those two, if you want to deal DoT or burst (flat) damage. Some items give Elemental damage, which are all three elements together, and, if they also gave DoTs (some items do), you could build a Elemental damage character (let’s say caster) and deal massive amounts of burst and DoT Elemental damage, which against some monsters could be really powerful since they’re resistant to Cold, but have 0 resist vs. Fire and Lightning. Look at it this way, the monster that has 82% Cold resist and 0 Fire and Lightning is damaged by a 2k Elemental damage and DoT damage character, let’s say you hit it for 2k each element (6k total burst and 6k total DoT) and before that you shred the resists by 50%. Now, the enemy has 32% Cold resist, -50% Fire and Lightning which results to 1360 Cold and Frostburn damage and 3000 Fire and Lightning and Burn and Electrocute damage. Now, instead of having the damage increased slightly, you basically annihilate everything. Not to mention that before this you hit for 8720, now you hit for 14720 (DoTs are counted), while normally you’d deal half of that due to having no DoTs. If you had only one element, you’d either deal massive damage (general, DoT + burst) or just slightly lower damage (due to resists that got reduced).
Bear in mind also that you can increase the damage by basically doing nothing, while Chaos and Aether damage have no DoT damage, but as a compensation, many items give huge boosts to that damage while granting very good defense stats. Not to mention that you can get random Aether damage boost from Necromancer and Arcanist, and Chaos damage from Occultist and Arcanist, while they also don’t have many resist shred sources. You can easily get around 80% Elemental shred by only masteries and devotions, while if you want Aether or Chaos resist, you gotta literally seek for them everywhere and you still don’t have enough (fun fact: Aether is the only damage type that ACTUALLY struggles with resist shred, since only Necromancer has 33% aether resist reduction at rank 10 of his Spectral Wrath, there is also a ring that reduces aether resist, Chaos is easier to get if you play a certain build). I’ve managed to get a maximum of 90 Aether shred (-x , -x%) and 32% (x reduced resist) on my Death Knight, while I struggle to get more than 86% on my Spellbinder, while I can make Elemental builds (mostly one element) that shred the resists by at least 80%. I managed to reach -132 (iirc) Chaos resist reduction with a crossbow build.
I kind of got off-topic, but I secured some of questions, I guess. 
