It kills the feeling of progression and then gives you little incentive to take your time and level up. It also breaks immersion, why would a highwayman need to rob you if he owns a full set of glass armor? It was broken. I want to get destroyed by beasts but I also want the ability to become so good that normal bandits become the equivalent of mudcrabs.
But the feeling of progression is still there - through the armour you wear, the spells you aquire, the types of enemies you fight...
If bandits were eventually rendered useless because you become uber-powerful, why have them in there? It would eventually become a chore fighting them if they are so weak. Take the Final Fantasy games - you become so strong that you end up fighting creatures who don't stand a chance: what's the point in that?
I like being challenged when playing games. I don't want a windy walk in the park.