Thanks.
I used basketball for inspiration. There is roughly 20% of the D1 basketball schools that participate in the tourney. It turns out that roughly 20% of the FBS schools equals the Top-25.
Then I had to worry about length of the playoff with so many teams, so the idea of the Bye was born. The Bye also serves as a reward for the top-8 seeds.
The Home field format is important for a couple of reasons. It allows for G5 schools with special seasons to host a first round game. It gives Cinderella a chance. Also, it serves as a financial reward for those schools seeded 8-16 in hosting. Big time money maker for those schools(beats going to those crappy, money losing Bowls you talk about).
Finally, this format allows for those schools who had great years, but missed the playoffs to still go to those Bowls that survive like the Citrus, Outback, etc. Football version of the Nit.