In my opinion, if death isn't a possibility in your campaign, this undermines the stakes and severely undermines the threat of your monsters. The moment the players notice that you are jumping through hoops to keep them alive, you lose a lot of the suspense.
This is a General RPG thread. So I don't think there can be any assumption that the only "loss condition", even in combat, is death.
The three FRPGs I've GMed most recently are Cortex+ Heroic, Prince Valiant and The Dying Earth. The former two don't involve death as a serious threat. The third I only GMed today, and I didn't have to remind myself of its health/death rules because there was very little fighting in the game, and no successful attacks.
In Prince Valiant, the most common form of fighting is jousting between knights, and the stakes are losing (or gaining) warhorses, arms and armour, as well as status/dignity. And these are some of the most dramatic fights I've GMed!
It's just a matter of the game following a consistent set of assumptions instead of a contradictory one.
If character arcs and character development are an important part of the game then the game shouldn't have random character death. There are many more interesting stakes and consequences than dying
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On the other hand, if the game is about deadly danger then it should kill PCs and should make it explicit that they are not expected to last. To be consistent, such a game should not push players towards character development arcs nor hide interesting abilities behind mechanical advancement.
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Honestly, I haven't had any problems with characters dying in any games other than D&D and other traditional games with more sacred cows than clear design.
Your post made me reflect on what is only the third PC death that's occurred in a game I've GMed in the past decade or so. It was in Classic Traveller about a month ago. (Last year we had a death in our first Prince Valiant session, when a PC sacrificed himself to the Wild Hunt to try to keep a noblewoman from hell; and nearly 10 years ago a 3rd level 4e D&D character ended up food for goblins. In the latter case there was an express player choice to start a new character.)
The character died when 3 PCs, who had been knocked unconscious following capture and interrogation, had regained consciousness in the medical bay of the enemy base while a 4th PC was taking out the base using a captured suit if powered armour. The now-dead character broke free of the straps holding him to his gurney and attempted to take down a SMG-wielding NPC who was keeping guard over the three captives. The attempt failed, and the PC was shot dead.
Traveller provides no mechanical support for heroic endeavours. So it's all on the GM in framing and the players in responding.
Earlier in the session, another captured PC had been able to get the drop on a SMG-wielding guard, and there was a dramatic back-and-forth wrestling over the gun which left the PC victorious but hurt. This was the PC who went on to don the powered armour. So the sad death served as a nice dramatic counterpoint to this PC's endeavours - but I wouldn't say the system itself provided a lot of support for that outcome, as opposed to a combination of deft GMing (if I do say so myself!) in combination with the random outcomes of action resolution.
Traveller PCs have their backstory established as part of the lifepath PC gen system, and there is very little mechanical PC development after that point. And I would not say that Traveller favours character development arcs - it's situation-based with a hint of setting, not deeply character-based. In our game, following advice from an early number of White Dwarf, each player started with two characters; and over the course of play a number of secondary characters have been brought into the group. The player was able to take on one of these recent additions as a new main PC.
I see the possibility of PC death, and its degree of arbitrariness, as something that results primarily from the system and secondarily from GM framing of situations and adjudication of consequences. The idea that without the risk of PC death the stakes must be low and/or the resolution insipid isn't one I give much credence to.