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In my experience (Living Greyhawk-Bandit Kingdoms; Living Arcanis) where this was a thing, it leads to continued escalation between players/authors. You inevitably reach a point where people are terrified to play outside their trusted friends, certain builds are the only acceptable ones, and it's not that fun a time for everyone involved.

Hard encounters are fine, when they are at the appropriate difficulty level by level/APL. Tier 1-5 can be challenging without being completely unforgiving, whereas Tier 7-11 generally should be challenging with less margin for error. Making every fight an optimized meatgrinder is not fun, though, and inevitably deters new players from wanting to play at all.

I relatively recently moved to a new area (which as I have come to learn was Bandit Kingdoms Territory) and I've seen the legacy of this living on in Pathfinder. And not in a good way.

I was GMing a scenario that I considered fairly challenging. Not unfair levels of hard in my mind. And the players absolutely destroyed it. Their builds had nothing extraneous. Nothing but "kill it as quickly as possible." When I said something about the power level of the table the response was "this was the Bandit Kingdoms. If you didn't play like that you died."

We were talking about our characters and I mentioned the one "power" character I have is a Wheeling Charge Wayang Cavalier that I never play because the entire combat is "I charge it and it dies." "Oh yeah," replies one player. "I have one of those too but I never play it because it's my weakest character." "Doesn't killing everything so fast and without variation get boring?" "No, this was the Bandit Kingdoms and that's how we all played."

I've seen some GMs use absolutely lethal tactics. Nothing illegal but always the deadliest option. If given the choice between a squishy PC who poses absolutely no threat and a tough PC who could take out the NPCs, kill the squishy first. Why? Because "There are more encounters later and that's how we did it in the Bandit Kingdoms."

This season the tables have turned on the former Bandit Kingdomers and the newer players have a chance to shine. Because 7-int non-human pure combat characters are not able to make the skill checks that show up so often in season 7. I don't consider this a good situation - a lot of the Bandit Kingdomers are only showing up to play if they are sure the scenario has a lot of combat (so their characters will "matter"). But maybe some good will come of it and they will build more balanced characters.

So yeah, once you get into that "all combats must be brutally hard" mindset it's just a little step before you lose the ability to role-play and to build balanced characters. There's really two groups of people. Those still stuck in the Bandit Kingdoms days of be the "right" build or die and the (fortunately larger) group of people who play Pathfinder.