Such as, when designing an encounter at the midpoint of the game. In a strict level system, the dev knows the characters are going to be, say, level 5 at that point, and can craft the desired difficulty accordingly. In an open system, the dev has no idea what the character will be at, which can leave the challenge level all over the place, if the encounter is of a fixed challenge. Of course, if the encounter is scaled to your level...
I don't see a problem with an encounter or quest being intended for a certain level range. If the player doesn't do it at the "right time" and the game world is arranged in a way that allows the player to do it at the "wrong time" to get the ideal benefit (i.e. 200 XP no longer means much) then who cares? The quest would have been easy by that point and the player is beyond its intended level, so what does it matter? For stuff like fetch quests it doesn't make sense to award high-level amounts of XP for completing effectively low-level tasks anyway.
I completely agree with you. What you describe is what I prefer, actually. I should have said, "In
open character progression, the dev has no idea what the character will be at, which can leave the challenge level all over the place, if the encounter is of a fixed challenge. Of course, if the encounter is scaled to your level..."
Meaning, in a use-based progression system where you have 3 players who have done the exact same quests in the exact same order, when character A arrives at a particular quest at the midpoint of the game, he might have incredible fighting ability and nothing else, whereas character B might have incredible stealth and no fighting ability, and character C might have a little bit of everything and no strengths at all. The more open the character progression, the less foreknowledge the dev has of what the character will be capable of at any given point in the game, making it that much harder to maintain at least the bare minimum of challenge for every player in the game. Which is another reason why a dev who isn't trying to make a hiking sim might choose to use a level-based system.
I didn't quite fill in that thought properly. My bad.