Now were delving into the whole debate about wysiwyg editors....
!! caution: below is a very opinionated editorial, you may not like it !!
A long time ago I wanted to go with a bbcode style editor. I personally liked the limited editor that came with / comes with Wordpress better than TinyMCE. However, I was outvoted. Since I wasn't responsible at the time for coding it, releasing it, or supporting it; TinyMCE went in. Even I don't get my way with CMSMS all of the time (just a large percentage of the time

). To this day I do not like TinyMCE, do not as a general rule use it, and do not know much about its internal workings. I have done limited work with the TinyMCE module but mostly related to compatibility issues, or simple bugs.
The problem Jos mentioned, as I see it is that often times calling a module or some other tag, like {News} will itself output a containing <div> depending on its template, or code. Calling {News} on a line by itself inside the wysiwyg editor will often (though not always) result in stuff like <p><div class="something">... a whole bunch of stuff ...</div></p> which is gross but still technically valid (I think). Nonetheless it can be a royal PITA to deal with. Not because it doesn't work, but because it
CAN cause problems with styling etc. I have seen this myself in the past.
However, we are still talking about the basics here... A reminder: CMSMS is designed for experienced web developers to be able to build sites so that end users can manage the content. So that you (the designer/developer) don't have to do things like change the company slogan, type in the latest press release, or edit the 'about us' page because some employee joined or left the company.
In the above cases the editor should be able to edit the page, and change the content in a page easily, Add or edit an article in the news directory. Or go into the CompanyDirectory module and delete an employee record... something which should be quite easy for them to do. Your average content editor should probably not be calling modules, or udt's or other tags that insert large blocks of content in the middle of other stuff. This is blurring the lines between the role of designer and editor.
As I've said many times: wysiwygs are for content editors, not designers. Designers/developers know html (or should), but are generally third parties that are not knowledgeable about the inner workings of the customers organization. Content editors know about content, grammar and specifics of the website, organization or the content they are managing, but generally know very little about the technology that is used to build their website and make the magic happen. Designers/developers generally shouldn't be managing content, and content editors shouldn't have to worry AT ALL about the layout of the site. Ideally they should be able to type stuff, and it just 'works'.
If you as a designer want to insert a call to {news} in the content area of a page, as that is part of the design that is fine... just disable the wysiwg editor for that page and don't allow the content editor to edit it.
If you really really want to blur the lines, or because you as a designer/developer don't know HTML then you can install the full blown (bloated, heavy, complex, hard to use) TinyMCE module. Or a different wysiwyg editor with different functionality. And better yet, if you install more than one, your editors can chose between the different editors, and you can probably configure each one to your liking.
A possible exception to the 'editors shouldn't be calling tags that insert large chunks of content' thing I said above would be things like youtube videos, etc that are content that an editor may be responsible for. An editor may wish to embed a video into the content for a news article, and has been trained to do something like type: <enter>{youtube video=19238323}<enter> which could result in gross html like mentioned above. However, to my knowledge this ugly html is still valid, and can be accounted for in stylesheets.
I have only had one person give me a (IMnsHO) valid reason for this checkbox that isn't solvable any other way (yet). However, the proper solution to the problem he reported (that is a problem all editors will probably encounter) is another button, not to allow the editor to muck with HTML. I am still trying to find a way to solve that problem.
Are there any other reasons that are applicable to 80% of the editors? Convince me.
!! End of editorial !!