What is wrong with difficulty levels existing at all is that it implies that the game is trying to beat you, not the other way around.
There are basically two classifications of games - those where you play against people, and those where you play against “the game”. An example of each would be chess, and patience.
Games where you play against others are almost trivial to set difficulty - you play against people of similar skill, or you randomly allot the chances of winning from game to game and thus difficulty is irrelevant.
Games where you play against “the game” are much more awkward to explain because of the incredibly long lasting legacy of the 70s and 80s arcade coin-op mentality and how they’ve affected the current generations of games programmers. Coin-op is very much about trying to “beat” the game for as long as possible before it extracts money from you. They are deliberately tuned to allow you to incrementally get a bit better at it every time you play, and get a bit further. This mentality persists to the modern day with such ridiculous concepts as “save points” which are a total anachronism.
The root of the problem is this: it should be as much fun to “lose” a game as it is to “win”. It should, in effect, simply be fun playing the game. For 99% of all players, hard is not fun. Unfortunately nearly all developers, and especially developers of their own computer game, are in the 1% who get bored with the challenge quite quickly and decide to try and stack the odds against themselves actually completing the game. Then they go and make their game too hard, and so they retrofit a lame difficulty level selector for the 99% of the population for whom it should have been irrelevant.
My tip: every time I made my games easier, they sold more. The easier they are… the more they sold. This is down to one single factor alone: easy games are what people want to play. Easy games are more fun for more people. Don’t waste your time with difficulty selectors that mean nothing to 99% of your customers.
Cas