When TIMELINE THUMBNAILS = OFF, I think it is still important to know
a) where you are in the file (visual representation from playhead and time)
b) the visual representation of the video and audio cache

There is some, for me, odd dependency:
I have assigned Timeline to shortcut "T". When TIMELINE > THUMBNAILS = ON and pressing "T" I see no playhead. When TIMELINE > THUMBNAILS = OFF, I get the playhead ...
So, THUMBNAILS not only removes video thumbnails and audio waveform (which is plausible), but also the playhead.