Erhua 儿 - does it actually mean something?

Dear chinesepod,

I am puzzled by using  儿 ér in some words (and not using it in some other words). Except few 

You, Shanghai-based chinesepod guys, almost exclusively use 哪里 / nǎlǐ for "where" in your lessons, whereas my teacher never says anything but 哪儿 / nǎr (she studied in Beijing). The textbook I use also always mentions 哪儿 / nǎr.

Now, interestingly, I found in wikipedia article "Erhua" that the -儿 / -ér is used as diminutive.

So, when I see something like 我要买这个包儿 /wǒ yào mǎi zhèi ge bāor/, does it mean they want to buy a (relatively) small-sized bag (compared to what)? And when using 一点儿 / yī diǎr (a little bit) instead of 一点  / yīdiǎn or 一点点 (supposedly the same as 一点儿), does it mean that the former is a really "tiny bit" -- something less significant than the latter?

And what about 饭店 / fàndiàn (restaurant) vs. 饭店儿 / fàndiànr - is the latter a smaller restaurant than the former?

Thank you,

Jindrich