Bandit's Guile, introduced in the Cata patch, accompanied the rather severe reduction of combat's potential. Combat previously was balanced around armor pen, which was entirely removed. Bandit's Guile is a ramping mechanism. Originally, it was tied to a specific mob, making it entirely unreasonable to change targets very often.
Bandit's Guile is not at all supported by the UI.
Is the best addon I'm aware of. It gets confused on stuff like vanish->ambush (and sometimes fan I think), but is generally reliable. There's probably a way to do it in power or weak auras. The big thing is that other addons don't easily show you your progression through the color.
Phase one- blank. Your rogue at rest is at blank 0. As soon as you sinister or revealing, you enter blank 1, then blank 2, then blank 3. At this point, your next sinister or revealing enters green 0- A 10% damage buff. Most rogues try to transition out of blank as rapidly as possible. The largest relative gains are getting to green from blank. You should generally try to avoid finishers besides slice and dice in blank, using anticipation to bank points so that you can spend them in green.
Phase two- green (10%). While you can stay in any of the blanks indefinitely (the hidden "bandit points" don't expire), once you are in green, you have a 15 second buff. Pressing it to go to the next green stage refreshes the buff. In green you have 10% damage. Rogues normally try to progress out of green pretty quickly too, but while blank feels like a penalty, green is not as bad. Once you go through green 0, 1, 2, and 3, your next sinister or revealing pushes you to yellow.
Phase three- yellow (20%). If you had infinite energy, it would make sense to simply progress through the insights as rapidly as possible (you'd still press finishers), with your goal being not spending much time outside of red. However, energy is not infinite, and during times when adrenaline rush (the big energy generator), shadow blades (this also makes much more energy with a +19% chance of white attacks to hit), and killing spree (does good damage while preventing you from spending energy, so it pools) are all down, you won't be able to progress your BG stack every global. In that situation, you should consider pooling while in yellow. With finite energy and red having a fixed duration, you have to choose whether to lengthen blank, green, or yellow, and yellow is the obvious winner. Once you progress through yellow 0,1,2,3, you move to red.
Finishing phase- red (30%). Nothing you can do will extent red, which begins timing out the moment it appears. Sims and calculations have found that the intuitive thing (saving cooldowns such as engineering gloves) for red insight is not always much benefit, and sometimes is a loss versus simply using them on cooldown. The burst potential of this phase is adequate, but there's not a lot of control over when it happens- it's normally best to transition into it with a goodly number of energy and combo points and go to town.
I haven't seen much analysis of what to do in an aoe situation- for instance, pressing fan of knives while in yellow 0 will give you combo points, but not advance BG. If an aoe situation happens, one could imagine a situation where it would be better to ignore the adds for a moment while building to green or yellow, and then use that during the phase- and if long enough, throwing another sinister or revealing to progress into green 1 or yellow 1. Possibly even there is a time where it would be better to focus on getting to yellow 3, pool to max, transition into red, and then blow cooldowns. With combat's aoe so anemic this hasn't really been that well considered.
In cata, this mechanic made combat not a spec on several fights. An situation involving "get on the add" was normally handled by the rogues just NOT doing that, or being one of the other specs. Destroying a yellow 0 stack was terrible. As partial compensation, redirect was buffed to move the stack around, and also buffed to be affected by restless blades. Even after the massive unnerf (in MoP, your stack is on you, not the mob), redirect remains in a buffed state for combat.
1)- If we're going to keep this mechanic, Blizzard owes us a UI element.
2)- If we're going to keep this mechanic, it would be good to give us some method of messing with it. If there's a phase where raid dps matters and you can build up to it by hitting stuff that mostly doesn't (say, spine of deathwing), you could meaningfully enter at yellow 2 or yellow 3 every single time if you cared to- but this isn't very rewarded. DPS leading up to that phase has to be SUPER unimportant, because the only combo generator you can use except your deliberate timed ones is fan of knives (formerly shiv), meaning that you have very little control over it.
3)- It would be nice to see a dps trick that is blind to it. For instance, a version of sinister strike that does not advance bandit's guile could be interesting, if perhaps too technical for some of the playerbase. You would obviously use this over sinister in red, and depending on how powerful it is, you may choose to use it in yellow for awhile. I see why we don't have it, but it's not out of line as an idea.
Another option would be to delete it. But before you say that, think about whether it could be made interesting. As it is, I think it's much better than in cata. I do feel that having to go through so much ramp up, the actual burst out of red with all cooldowns should exceed what other dps classes provide- and it very super much does not. Ret paladin talents allow them substantially more burst than combat, as do feral/moonkin talents, as do shaman talents. There's nothing bursty about combat, even with all the ramp up. With a 4% AP boost (25 to 30 percent) on the line for 5.2, combat may be the only spec to be (or may be a dead spec) for most fights- but either way, it's all about sustained on live or on fictional 5.2.