Most death penalties come down to lost time, in its various incarnations of lost experience points, item repairs, corpse runs, and debuffs. As death penalties become increasingly light, one type almost invariably remains: you wasted the time you spent failing, and now you need to run back to continue. (If you die in a group, you may just sit out a while until rezzed, hoping your group does not wipe at -1 member, or a shorter time with -2 members during the rez.)
This time-to-return can be very important. If it is very short, and the death penalty is otherwise small, you zerg things: just keep dying and coming back until you get through it. It is a measure of how far we have gotten past meatspace that we can now intuitively see solutions that include “die and come back” as part of viable plans. To take the first few examples that come to mind: our LotRO static group wiped on an overpull with adds last week, but ran back to clear it easily since we had taken out 75% of the enemies on the first try; LotRO three-man instances are short enough for people to die and come back while someone keeps the boss from resetting, and some turtle-raiding strategies involve planned deaths to reset the stacking DoTs; fights against CoX archvillains and giant monsters often involve multiple resurrections and hospital runs/teleports, and the Hamidon raid usually involves planned near-wipes.
This is usually not a good thing for the game. If the death penalty is otherwise trivial (xp debt means almost nothing at CoX’s level cap), the content becomes trivial due to perverse solution. (Many groups will avoid that solution, because of pride or the meatspace intuition that death is a bad thing to be avoided.) Avoiding this is why some resurrection spots are so far from the real fight: that is your real death penalty, and it keeps you from winning the fight despite multiple gradual rolling TPKs. An alternate solution is to have a barrier to keep people from returning, as many of the LotRO boss fights have, although it may strike you as odd that you can slay the dragon or archdevil but not open the door when he closes it. Full resets of fights, including adds and/or entire rooms of enemies, are common developer tactics against this, although it can encourage the various ways to having one person stay alive to keep the fight from resetting.
This becomes particularly significant in PvP. WAR fights near the warcamps are idiotic. One team is going to half-ignore casualties and keep coming, usually to their great advantage but occasionally they will get farmed. The worst are the zones where the warcamps are near each other, where both sides are effectively playing a really bad FPS with quick respawn (and very little realm rank gain).
This weekend, I played on a Team Fortress 2 server with the following rules: 2Fort map, no time limit, instant respawn, no limit on class numbers. This led to all kinds of stupid. That map usually features sniper wars, but our side had six snipers at one point because people were tired of being picked off as they tried to run across. Someone complained about our lousy snipers not taking out theirs, but what are you going to do when someone can be back on the battlements literally three seconds after dying? If you kill someone and hit your taunt, they might be shooting at you before you finish the animation.
As in WAR, it creates a great advantage when the fight moves to your base. You can push forward, wipe the enemies on your way to capture the intelligence, and have them all coming for you again (and again) as you try to escape with it.
This absurdity is partially offset by the ability to have a one-man relay race. The intelligence resets back to the basement if no one touches it for a minute, so you have sixty seconds to tag it and keep it alive. If you get one lucky run that punches through the enemy defenses but fails to get the intel home and safe, keep making suicide runs at wherever you dropped it. If you can touch the intel, you get another minute to keep trying; if you move it two feet each time, eventually it will be safely inside your base. You might get twelve tries in sixty seconds, including the respawn and running time. Worst case, send a couple of medics healing each other, and one will live long enough to tag it.
No one likes sitting out for a while after dying, but it is worse when the enemy you killed does not need to.