I understand that low action on a guitar makes it easier to play. (See answers to this question for more on action and truss rods).
I've never understood why all guitars aren't set-up with action as low as possible. What is the downside?
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There are those of us out there who have a "heavy hand" when it comes to pick attack. The reasons for this are many. For example, I developed a heavy hand because I learned how to play on an acoustic guitar first--and I play expressively. Expressive players, the ubiquitous example of which is a blues player, need a little extra space to accomodate variations in pick attacks, clean bends, and vibratos. As I'm sure you can imagine, if every note was picked by the player at exactly the same strength--which translates to a human powered compressor--then your playing would sound very uniform and the tolerances in clearance for string vibration in relation to the frets would be predictable. Therefore, you could have uniform action that is as low as the particular guitar setup would allow. That's great if you're Eric Johnson, but what if you're after something more dynamic? Ask any blues player if dynamics lends itself to his art. That would be like asking a metal player if overdrive is of any use. I would argue that many, if not all, of the great musicians of our time see the worth in dynamics as well; which I argue is also illustrated by their use of tube amplifiers, but that is another discussion all together.
So, my take on this is that lighter action is a trade of which the other side not just buzz, but of playing dynamics. Speed demons (the best of which are metal, prog rock, or jazz players) tend to utilize very light action and consequently are forced to have a very light touch in order to sound clean and tidy. On the other hand more dynamic players (such as the aforementioned blues category) have more low to mid range action. No one in their right mind plays with high action unless they don't know any better or somehow derive pleasure from pieces of bare metal wire digging into their fingertips XD.
The harder you play, the wider the string vibrates, the more likely that they will hit the strings, sounding clangy and robbing you of sustain and tone. Also, you can get your fingers under the other strings when you bend.
Right. "Action" is always a compromise. Playing ease and string buzz. If you are a delicate and precise player, you can get away with a very low action. If you like to "dig in" (as bluegrass players say), you'll need a bit more relief to avoid buzz.
I've noticed its much more problematic trying to play slide on a guitar with a low action. In fact I have an extra tele with a high action for my slide stuff.