That's not a 5E thing. At least, it's not a thing past level 3 or so. In any case, a TPK is also not an interesting outcome. (If everyone dies to some random encounter, then that's going to feel like everything leading up to it was a waste of time.)
As a general rule of game design, you don't want there to be a significant chance of TPK in most encounters, or else statistically a TPK will happen due to random chance.
Hmm. Different experiences then. For example, just last session we had our wizard go from the age of 49 to the age of 89, which promptly caused them to drop out of play. They were still part of the group, but were weezing and coughing, generally acting traumatised. The party eventually succeeded, tho at great cost
(party member) and in so doing, procured the support of a powerful asset
(said ghost).
Before that, not too long ago, the cleric of another group decided to jump through an open portal mid-combat. I have no idea why
(or rather, I do know why... I just don't understand why!) which meant the party went on the back foot and ended up retreating.
So, while most encounters are not designed to wipe the party, there seems to be enough swing in the system - and the sanity of our players, at least - to make a mess/challenge out of what some might call the mundane.
Should they have avoided these encounters? Maybe? Though they weren't 'combat' encounters, rather just encounters.. that ended up with some/in combat. In retrospect I'm sure they would have loved to done things differently!
But back to milestone experience - does it really discourage fights? I guess it depends on the milestones, and again, the expectations of the players. There's also something to be said about player-knowledge based actions and character-knowledge based actions, but that's another box of kaboodles altogether.
I guess it comes down to encounter design*. Personally, I'm not one for worrying too much about 'balance'. Challenge, sure, but that can consist of a variety of elements
(including, apparently, open dimensional portals that only an idiot would.. ah never mind...) and be presented in with all manner of additional contexts.
Of course, if the point of a combat is to simply 'kill the thing' and the players have invested the time and resources into tipping things to their favour then sure, it can be a foregone conclusion. We've had groups sneak onto pirate ships and ghost everyone whilst sleeping. Did we make any dice rolls? Sure, a few but otherwise it was a given and the conclusion obvious. Job done, things move on and no xp awarded as it wasn't a challenge for this certain group**.
However, such a setup was still interesting and meaningful. They put a lot of resources and effort into the planning. The win was hard earnt. And I'm not sure how either a milestone or otherwise experience reward system would have influenced the party's desire to engage with said encounter.
I do agree that many modules and adventures seem to be designed around attrition and that designing around attrition is a tool in the designer's tool box. I wouldn't say its inherently a bad or good thing, mind - just a tool, though obviously, like any tool, if its used too often it can become tired and worn. Its also not a tool that is unique to 5E, being a narrative technique in many a book and awesome movie. Die Hard would be my classic example. John McClane whittled down those terrorists and was whittled down in turn, leading to a fantastic showdown. Did he try to avoid fights? Sure.. until he couldn't or had the upper hand. I'm not sure if John was clocking up the xp per terrorist kill or if he was awarded it per arc but hey!
Hmm. Where we at? Fighting = bad? Ye..ah. Sure. If resources, such as time, health or what have we are not tight supply, totally agree. Tho I believe its also a matter of play style - if players are lead to believe that an adventure will follow a series of combats, each designed to whittle down their resources, before encountering a BIG BAD, then yeah, this will naturally lead to fights being avoided. But this is also a failure on the designer's part. They have used one tool, and in a certain pattern, too often. And now have a great oppertunity to challenge expectations.
*And as I mentioned in my original post, we don't award experience based on.. anything other than a general consensus, so naturally my experience is going to be coming in at a different angle.
**Tho the 'milestone' of removing the pirates from the bay? Sure, recognition and rewards!