Are the traffic traces in 12.4 used for anything other than creating software services through wizard?
Also, am I right on the below assumptions as data sources?
1. traffic diagnostics DMI (amdstats data files)
2.discovery - services DMI (zdata/ndata files)
If Auto-discovery is turned off on the AMD due to DB size restricitions, does it make discovery of services DMI report useless?
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The discovery reports won't work if the auto discovery on the AMD is off.
Database usage around auto discovery has been optimised so it can be used as default. Autodiscovered services are stored as aggregated data so don't take up as much space as fully decoded software services.
You're right, traffic traces in 12.4 are used for creating software services through HTTP wizard and through Packaged Applications wizard only. The diagnostics and overview reports that were present in RUM Console are no longer there. For diagnostics and discovery you should go to CAS reports.
Traffic diagnostics reports in CAS are based on the new amddata files. Old amdstatsdata files are no longer produced by AMD.