>>2067947It's most rewarding in strategy games with some element of roleplay and where losses are more like major setbacks then immediate total failure. Examples imo are XCOM, Kenshi, Total War, and Mount and Blade. These are games where you're often writing a story in your head as you play. Stories where the protag (you) wins every time with no setbacks are boring. Even if its infuriating in the moment, if you can come back from a major setback to scrape over the finish line it feels pretty momentous.
It can also encourage you to shake up your strategy and use parts of the game you otherwise wouldn't. While in a normal campaign you might prioritize long term benefits, when the entire campaign is on the line short term benefits become a lot more appealing.
Oh and in games with lots of characters, permadeath gives less powerful characters chances to shine. I've been playing thrawn's revenge and there's so many fucking obscure EU characters in that as heroes. If I reload every hero loss, I end up just throwing the spares on some planet and forgetting about them. But if I don't reload all of a sudden incredibly notable and important star wars character Surface Marshal Vatoki is my leading ground commander.