The rungs, in order

There is a working order for repairing compromised footage. It runs from the move that changes the picture least to the move that changes it most. Take the first rung that fixes the shot and stop there.

The grade itself. Noise, Clipping & Artifacts made the case for many small corrections instead of one large stretch, and on a reduced source that is the whole first rung. Most of what one of these plates can give you, it gives here.
Noise treatment, and grain afterward. The noise judgment belongs to the room before this one, including when accepting the grain is the right answer. That room also used a light dusting of grain to break the boundary between one banding step and the next. The reason to reach for it here is a different one: grain over a treated area puts texture back so it does not read as plastic. The Working Grade's node tree room works out where that sits in a real tree.
Deband, inside an isolation. Resolve's Deband filter, which is in the Studio version only, finds the edges of a band and dithers pixels across them until the step softens. The manual is specific about how to use it. Apply it to a region isolated with a window, a shape you draw around one part of the frame, or with a qualifier. Run over the whole frame it softens every edge in the picture. That softening is what you give up for it.
Broader strokes. On 8-bit and heavily compressed media the manual recommends the low resolution grids in the Color Warper. Broad adjustments across wide ranges of color stay smooth on that media, while tight ones pick up artifacts. The Working Grade's hue curves room teaches that instrument properly.

The transcode argument

Colorists argue about this one, and both sides are worth hearing. One camp converts an 8-bit file to a 10-bit intermediate before grading, on the grounds that the result is easier to grade. The other camp says the software already works at high internal precision, so the conversion changes nothing.

Blackmagic's own documentation settles the part that survives the argument, and it is written about processing precision rather than about the copy. Choosing deeper processing for an 8-bit clip does not reduce banding that is already in the original file. It can still help when you add further work on top of it. So the second file stops further loss from what you are about to do, and that is all it does.

There is a separate and honest reason to make a working copy, and it is speed. Heavily compressed footage is slow to decode. Resolve's Optimized Media makes efficient duplicates to work with, then hands you back the original files when it is time to finish. That is a performance decision rather than a quality one.

A second file stops further loss. It cannot recover what the camera already threw away.