Following is my opinion:
-Turning it off saves battery.
-Even turned off, it's not really off, since said on/off button is just a toggle switch, it does limit power usage by a LOT though.
-You should turn it off whenever you don't really use it. (not while typing a document as example but if you go away from keyboard/computer for longer than minute or two.
-Turning it on/off frequently will, without doubt "use up" the manufacturers calculated 10,000+ (no idea, it's quite high though) uses of the power button
-Wireless mice have usually pretty good power saving functions so leaving it on while it's not moved/bumped, will still save battery compared to "normal" use.