#include <bits/stdc++.h>
is an implementation file for a precompiled header.
From, software engineering perspective, it is a good idea to minimize the include. If you use it actually includes a lot of files, which your program may not need, thus increase both compile-time and program size unnecessarily. [edit: as pointed out by @Swordfish in the comments that the output program size remains unaffected. But still, it's good practice to include only the libraries you actually need, unless it's some competitive competition]
But in contests, using this file is a good idea, when you want to reduce the time wasted in doing chores; especially when your rank is time-sensitive.
It works in most online judges, programming contest environments, including ACM-ICPC (Sub-Regionals, Regionals, and World Finals) and many online judges.
The disadvantages of it are that it: