I think the main reason for having a separate installation of Moodle to serve as a staff intranet is to ensure that only staff have access to it.
In a normal Moodle installation, because of its flexibility, all users (even staff) are potential students on any course. Equally, all users (even students) are potential teachers. If you want to use Moodle as a vehicle for staff communication and interaction, this flexibility might be a problem, because (as far as I know) the system is not able to discern which users are staff and which ones are students. One way around this problem, of course, is to give each staff 'course' an enrolment key, thus keeping out students, who will not have been given the key.
Another approach is to set up a separate installation of Moodle aimed specifically at staff. Using your organisation's centralised authentication system (such as
LDAP/Active Directory, which is supported by Moodle), this separate installation of Moodle can be set up to only allow access to users who are designated as staff in the LDAP directory. This makes things much simpler, because there is now no need to protect all staff 'courses' with an enrolment key, because the system knows that all users are staff. Another advantage is that being a separate Moodle installation, it can have its own staff-focused character.
At my college, we've been using the above set-up for over a year and it has worked well. The Moodle-based staff intranet aims to make it easy for teams and individual staff to share information and online resources with fellow staff across the college. Staff can create, edit and update their own intranet sites focusing on whatever topic or set of resources they wish to share with other staff -- anything from training materials to social and recreational
activities.
Note that we changed some of the standard Moodle words. 'Course' in Moodle was changed to 'intranet site' for the staff intranet. The word 'Teacher' in Moodle was changed to 'editor' for the intranet. 'Students' in Moodle became 'staff members' for the intranet. These word changes can be done by editing Moodle's language pack.