My wife asked me after I complained about some information on a cereal box Starting With Capital Letters As If It Were a Title: who cares? Yes, it doesn't make sense, but what's the big deal?
Well, to someone who knows about these things, it "cuts the eye", as a Russian expression goes. It's like bad writing to a literate person. Like bad breath to someone who has a sense of smell.
Artemiy Lebedev gives an interesting example of this. Yesterday, when I was visiting a local library, I saw a sign, where letters were squeezed to fit into a certain horizontal space but remain a certain height. As a result, their proportion was ruined. It looked something like this:
Most people probably don't notice such things. But to someone who knows very-very little about the fonts, it "cuts the eye". The opposite (bloating letters) is also true. As Lebedev writes, "A person who knows something about fonts chuckles at the sight of bloated letters like a child who’s seeing his reflection in a fun-house mirror".
In short, the effect on "squeezing" letters is the same as doing this to a photograph (source):
Now, not all cultures have appreciation for all aspects of beauty. Germans have a bad sense of humor. English people, as is known, kill their food twice: first, when they kill it, and second, when the cook it. French don't appreciate the value of deodorants and clean hair. Russians and Americans have the "imperial font complex" where all notices are written in caps (plus, Americans place their punctuation inside quotes).
Chinese do not mind shifting the original proportions of a photograph (source):