The primary reason is precisely your second point, since there has been an active movement on a community level to use source control for managing plugins with the aid of plugin managers like pathogen, vundle, neobundle etc, it's become more of an easier approach to upgrading the plugins. You can also more easily control which release you would like to lock ...
Simply open the vimball file in Vim and then execute :source %.
It will move the files to their appropriate folders in your ~/.vim directory.
You don't need to be root as it just copies files to your ~/.vim directory. You can delete it after you have sourced the vimball file
Use the :RmVimball command. From :help :RmVimball
REMOVING A VIMBALL :RmVimball
:RmVimball vimballfile [path]
This command removes all files generated by the specified vimball
(but not any directories it may have made). One may choose a path
for de-installation, too (see 'runtimepath'); otherwise, the
:UseVimball path instead of :so [name].vba for vim8-packages/dein/vim-plug/minpac
If you use vim8 pack paths or a plugin manager which supports local plugins (e.g. dein or vim-plug), you might want to install a vimball (.vba[.gz]) into a specific directory and not merge it with your ~/.vim directory.
Example: Installation of Vis (Visual Block Cmds) by ...
The problem you're having is with your step 3. You need to open the vimball file in NeoVim and the command to do so is :e and not :vim.
:vim is actually a shorthand for :vimgrep, that's why your error message is talking about "invalid pattern", it's expecting at least two arguments, one pattern and one base path where to run a recursive grep.
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