When you log onto any World of Warcraft server let it be run by Blizzard or run by the private community, you will see vast majority of players will be at the max level. This affects the gameplay in a big way.
First it shifts the focus exclusively on end game, min/max type players who all go after the same exact gear given their class. This takes a large part of the game out of the mix, the leveling process.
When you are playing permadeath, you have a significant chance of dying and stopping your progress permanently. This has a self balancing aspect to it, as you will see majority of players are lower level instead of the opposite on other servers. And having to be resourceful in working with what you have as spending weeks farming some boss for that perfect armor or weapon for your given level is just not worth it. So there ends up being a more diverse and mix of possibilities since people will be constantly leveling.
Also when playing “softcore” (non permedeath servers), a persons status or highest PvP rank or best geared will only be proportional to the time invested. More time you play the more wealth, better gear, and higher level. When you are playing permadeath it’s no longer about time investment its about ability. A person could spend years on the server but can never get a character above level 40 without dying. Where another player could spend just a few weeks here and have a level 50. It’s all about playing smart as opposed to playing long hours.
The last and final reason why chose a permadeath server is the pure excitement. That there is much more extremes to the games excitement, every lvl you attain is a massive accomplishment, and death is a massive pain. You defiantly wont get bored.
So is permadeath for everyone? No it defiantly is not. Check out the wikipedia on permadeath, nice history and analysis on the concept.