Some quick thoughts, gotta run out shortly ...

The short (and somewhat tongue-in-cheek obnoxious) answer to why
there is no real discussion of "why a project would use TEI in lieu
of alternatives" is because there really aren't any alternatives.

The TEI's strong point is in encoding details of existing documents.
If you are interested in recording not just the structure of
_Gulliver's Travels_, but also in calling forth that the amount of
food and drink for "1724" Lilliputians is in error (Swift meant 1728),
and providing the correction, then there is really no decent option
out there except TEI.

If you are interested in recording not just the printed edition of
_Gulliver's Travels_, but also the hand-written notes in the margins,
TEI is your friend. If you are interested in noting the sentence
structure or comparing and contrasting the language of Lilliputians
vs that of the Brobdingnagians, TEI is your friend. If you'd like to
point out areas in which Swift addresses specific themes of religion,
morality, and corruption, TEI is your friend.

If you are only interested in single-source publishing _Gulliver's
Travels_, then using DocBook, XHTML, or EPUB may make more sense.
(Personally I'd use TEI, but that's because I'm a TEI expert, not
because those other formats don't do single-source publishing well.)

But (IMHO) any significant project should have an eye towards data
curation and longevity as well. From what little I know of all these
other formats, TEI and its self-documenting ODD extension system wins
hands down in this arena.

Some of these, of course, are all arguments for a specific encoding,
not just for a base/master/root format. But if the bulk of your
encoding is in TEI, it certainly makes sense to use it as a
base/master/root. It *may* make sense to use TEI in this role, even
if the bulk of the encoding is in something else. (It may make more
sense to use METS, though.)

And I'll posit one quibble with Martin's response: I don't think of
XHTML as a general-purpose schema. It's a web-publishing schema that
has had some general-purpose capability tacked on.