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What I feel in many threads discussions is that people forget that games are supposed to be fun.
Fun can be story content, or it can be socialization, or it can be challenges of sorts.
However, if you introduce stuff like item decay into your game, it doesnt mean that crafting is important in your game. It means crafting is a hassle. It means crafting just HAS to be done, all the time, again and again, and is thus a timewaster. It means a sane player will script their crafting because they cant avoid it - even if it needs zip thinking and has zip entertainment value.
Item decay makes complex items impossible. Working for hours at a single item is just not an option anymore.
Thus, item decay is treadmill gaming. It trivialized content and it keeps players busy with an inherently dull action.
Crafting as an entertaining game element means it must offer a challenge. It means your crafting system would have to be complex and powerful, making it possible to spend extended length of time for better results. An ideal crafting system would allow you to spend weeks in the process of crafting the ultimate item, and months to collect the ultimate ingredients. Then crafting has entertainment value because you actually archieve something.
Permadeath has the same problem. People demand permadeath to make games "harder". But in reality, permadeath is usually creating games that are easier, or even simply trivial. They are score games - you check out how long your character can survive, and then when ultimately your character will die, you get a score. Thats all the game is about - get the highest score. Any attempt to introduce real complexity into such a game is pretty much superflous. Thus the game turn really easy, they are typically twitch based, like Tetris.
There are exceptions. You can make the permadeath mode a special mode of an ordinary RPG. Like the hardcore mode of Diablo 2. Or you can introduce elements that can compensate for permadeath - like clones in EVE.
Diablo 2 hardcore mode works because there is a non-hardcore mode where you can test what works and what doesnt work, thus removing the potential immense frustration from the hardcore mode. Hardcore mode in Diablo 2 is still a score game, though - it includes the toplists. And you can basically "cheat" - you can store the good drops gained in the hardcore mode on a second character that isnt exploring and thus doesnt face the danger of permadeath, so while the character will be gone, the good drops will still be there.
EVE works because thanks to stuff like cloning. It is thus not actually really permadeath.
If you introduce such loopholes, a game can be complex and technically have permadeath and make sense as a game concept. But in general, permadeath means your game is pretty shallow and just a score game.