Tile engines have been used ever-since because they save up memory and speed. Remember good old games like Zelda III, Super Mario World, R-Type and even Bomberman? All of these games run on a tile engine, no matter if it's top-down view of from the side. In fact, nearly all console games before N64 / PSX / Saturn are tile-based games and the consoles are optimized to display tiles. Here are some (original size) screenshots:
Sounds too nostalgic? Well in fact it's more than just a programming technique, it's a design question! I personally like those old games and I like the way of editing tile maps. It's much easier than setting up a 3D environment for your game and you'll see the results of your work quite early. Note that you can create a 3D effect when using isometric tiles, wel'll get back to this later.
So what's the big idea behind tiles? A tile engine basically saves up memory by storing a set of small graphics instead of huge pictures. This tile set is then used by a map file to put it all together. See the screenshots above for example, you'll find the same details over and over again - noticed the floor patterns? Some more advantages are listed below:
Of course there's also a number of disadvantages when using tiles. For example you cannot make adventure games like Leisure Suit Larry, Indiana Jones or Monkey Island. Those games have static backgrounds which is the direct opposite of tiles. Note that this has nothing to do with the mouse control! Refering to Syndicate or Command & Conquer at this point, those are both tile-based games. Syndicate btw. uses isometric tiles, thus creating some kind of 3D effect (see screenshot below).
Some more disadvantages are listed below:
(For those needing more information about Monkey Island's SCUMM engine: Click here)
Of course there's a number of ways to get around these problems but this gets out of the basics I will teach you. See Diablo for example, this is in fact a tile-based (isometric) game. They used many tricks to hide it, however.