What are the advantages of publishing work in progress as a working paper?
The advantages are that you get to stake a claim to some sense of ownership of the work; it's a way of inviting feedback and collaboration from others by showcasing your work in progress; and it's a quicker way to publish your work than submitting to a journal or conference.

So when do you publish your work as a working paper?

When the following conditions are met:


You've done some work.
And some combination of:

you want feedback on it from a wider group than your immediate colleagues;
you want to showcase your work to get new collaborators, new funding, or improved career prospects
you want to publicly stake a claim to the work you've done

And some combination of: 


the follow-up work is something that you've already got sufficiently far advanced that it is very unlikely that you will get scooped by your competitors;
you're not bothered about being first to publish the follow-up work yourself.

And publishing your work in a working paper won't prevent it from appearing (possibly in modified form) in a journal.