Well, let's see, I've got a ridiculously sized game collection, spanning from Coleco to Wii, with much of what's in between. The Super Nintendo was the height of awesome for me, and I still break it out once in a while to relive those memories.
I'm also a fairly big RPG nut, recently been playing WoW, may god have mercy on my soul.
I've got all three "current-gen" systems, and love them all for various reasons.
So you're a weakling farmboy or farmgirl, heading out into epic adventure and you come across a group of monsters that you just can't defeat. Not to worry! You just happen to be in an RPG, and if things are too difficult, you can always spend some time picking on the weaker enemies for experience and lunch money.. most of the time. What if while you were off killing enemies and gaining experience, the annoying boss that just killed you was out doing the exact same thing? Level scaling is generally meant to infuse some sort of constant challenge into an RPG, but may end up missing the point of why most people play RPGs to begin with.
The Bad: On the bad side of things, we'll start with Final Fantasy VIII. Now, setting aside the fact that many didn't like FFVIII because it wasn't Final Fantasy VII-2:Electric Boogaloo, it probably didn't gain any points with gamers due to its rather different systems either. Think for a moment if FFVII was your first RPG and you were accustomed to overcoming your challenges by simply getting stronger and taking another whack at it. This same strategy in FFVIII was utterly useless. Stat gains from Level Up were negligible in the long run, and enemies gained ridiculous amounts of HP and other stats as they leveled up along with your party. FFVIII tried to shake things up by making Magic Junctioning the most important part of the game, but you could really end up screwed over if you didn't spend time collecting 100's of spells, or unlocked the right Junction abilities. Granted there were enemies that were still weaker than others, but the gap between enemies and player stat gains only widened as the level went higher. This was frustrating, to say the least.
It's not easy being green, especially in Cyrodil
One of the things I find most enjoyable about RPGs is that if I can't get past a certain enemy right now, or can't defeat a boss with my current power, I know that if I take enough time to train I can come back and swat them down like the fly they are. This is why I had such a problem trying to enjoy the next game I'm going to talk about, Elder Scrolls: Oblivion. Now, the freedom in Oblivion is great and the game is beautiful, which makes exploration tons of fun. However, because of the open world, there was no way for Bethesda to really know where the player would go next. Rather than make enemies stronger in certain areas and thus creating a soft linear path, they chose to have enemies scale to the level of the player. I fully understand the reasoning for this decision, as when one of your major selling points is an open world, you don't want to create limitations by saying "you shouldn't be here yet". However, that doesn't mean I enjoy it and judging from how quickly it took for someone in the modding community to "fix" the level scaling, I imagine many others didn't either.
It slices! It dices! It makes Julienne fries!
The Good:(Sort of..)
Finally, we come to a game that I feel actually handles level scaling in a decent manner, Silverfall. Now, I wouldn't call Silverfall a great game, or really even a good game. Mediocre is probably the best way to describe it, what with a clunky interface, a camera system that could have been designed by Sonic Team, and a generally lackluster plot. Somehow they managed to put something amazing into the hulking 10 Gb behemoth though, and that is the level scaling system. For those of you who have neither played nor heard of Silverfall, it's your basic hack and slash Diablo clone, which is great for mindless fun. Part of what gets boring in these types of games though, is that if you stay in any one area too long, enemies don't put up a fight anymore, loot gets worse, and you're barely gaining any experience even though you need to keep fighting here to finish quests and move the storyline along. Diablo II avoided this for the most part by having excellent pacing and level design, but if you can't be Blizzard, Silverfall comes up with a workable solution.
Enemies in Silverfall seem to level along with the player at first. Leaving town in the beginning will have you meeting a collection of Level 1 monsters, but as your level raises, those monsters also seem to get stronger, even in places you've already been. What makes this system better than others that I've seen is the fact that areas seem to have an enemy level cap placed on them. Those same level 1 enemies never ended up higher than level 9 or 10, even when I had already reached level 16 myself. In this way, the general challenge of fighting was kept up while I had to complete quests in that area, but at the same time I was able to eventually come back and feel like the flame-sword-wielding badass that my character was. It struck a nice balance between two systems, and was probably my favorite part about the game. Well, that, and the physics engine. Why does a Diablo-like need a physics engine? Flying zombies, that's why.
In the end, with all the things wrong with it, Silverfall at least proves that Level scaling can be used to some effect in an RPG without making the player feel like they are never getting any stronger. Since most RPGs tend to get by on the strength of their story and not always on their gameplay mechanics, it doesn't immediately make sense why as a developer you would put in a system that may very well make it too difficult for some people to actually see the end of your story.