My understanding of it all is that before they are 12mos, a baby's tummy can't tolerate whole milk. Therefore, formula is designed to mimic bmilk which is ultimately the best for them, and have broken down proteins that a baby can digest. Once their systems are thought to be mature around 12 mos, they are allowed to drink whole milk, and has benefits of calcium and fat for brain development. After 2 yrs old, however, they don't need all the fat anymore and should transfer to 2 % or skim milk. Yes, the majority of the nutrients from the formula will now be received from foods, but an average of 16 oz of milk or milk product is recommended for a day. Check the Toddler Boards (after 12 mos seems to be considered a toddler I think) for great tips on feeding and milk intake.
My dd gets a sippy of milk, 3-4 oz, with each meal (8, 12:30, 6). Then, I offer watered-down juice during play and with snacks (10, 3:30), and her pm snack is usually 4 oz yogurt. And for now she's still getting 6 oz of milk in a bottle before bed. My next step, this month actually, is to convert the bedtime bottle into a light snack, such as crackers, with some milk.