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I don't want to waste tens of gigabytes of space on my laptop to store apps that I can just as easily download from the App Store.
Assuming I would have to recover an iPhone backup from iTunes to a brand new replacement iPhone, what will I lose if I don't agree to transfer purchases when making the backup?
I understand the apprehension!
In reality, though, you do not stand to lose anything. The only reason to transfer those purchases to your computer would be to save bandwidth and time by not re-downloading everything. You will still lose associated app data (e.g. login information, cache, etc.), but that would happen even if you did back up those apps to your computer.
In short, you will be fine without transferring purchases.
Hope this helps!
You'll only lose something if you had a purchased medium (music, app, ...) on the device that was taken down from the iTunes Store in the meantime. For example, if a developer deletes their account, all their apps will disappear from the store and they won't be available through your Purchases section ever again, so if you don't have the .ipa, you can't install it again.
The transfer purchases part should be your least worry. This only backs up the purchased apps and music (occasionally people also have videos - I don't).
All this extra information backed up in general takes up much less space on your PC than the app contents (think spotify) and camera roll photos which are backed up by default by iTunes to your C drive and may take up GBs upon GBs alone.
