So yes, in a living world you can have deadly challenges across all tiers of play and a reason for them in game by working with the system.
I'm not sure what you're describing is 'working with the system,' or 'accepting that the system doesn't work,' or 'distorting the campaign to compensate for the system's shortcomings.'
Or you can work against the system and prove how easy it is to "break" the game.
You don't have to work against the system for it to 'break,' you have to work against it to keep it from breaking. The system says any wizard can just pick a spell at level-up that will let him rest more or less at will. If you don't work against the system he rests more or less at will, and the system's class balance and encounter difficulty guidelines 'break.' It's your job as DM to fix or otherwise cope with that (constantly foil the spell, dial up encounters, give out some magic items to beef up the characters disfavored by the slower pacing, then dial up encounters some more, etc).
And while there are mechanical ways to ensure that every single encounter is balanced for challenge, as has been discussed, there are also plenty of story ways that also allow you to have variety in the challenge being presented.
That's actually part of the issue: the 'story' of your campaign might go in a lot of different directions, different challenges, different pacing, etc, over it's run. But, if you're not willing to over-rule the system fairly assertively in this and other areas, it won't work that well for you across all that.
I like the fact that sometimes after fighting a deadly fight early in the morning and worrying about the next encounter that there isn't one, and that we "got off easy" that day. I like the fact that sometimes after facing a full day's encounters, I'm still not to the objective and have to decide whether to push on at a disadvantage or retreat and risk failure of my goal.
The elephant can enable results like that - or stomp on them. Deadly fight early in the morning? Force a rest, you're fine. You didn't 'get off easy,' because you just pushed the button and got the rest, you get off easy whenever you feel like it. Pushing on at a disadvantage /is/ risking failure, push that button, you should have bypassed some of those encounters, anyway.
I like the variety of stories that are able to be told without a set in stone mechanical solution to ensuring balance in every fight.
It's not so much 'balance' (which is on the intra-party side, mainly around class) as 'difficulty' being what you designed it to be, and you can always dial that up or down, you just have to be aware of it, and aware what that means to exp and advancement (and maybe tweak that, as well). That's the less intractable part of the issue.
I always find it amusing when people want to use D&D as a world building system. Good grief, D&D has never, ever been a good system for world building. It's entirely illogical and mind bogglingly full of holes. Doesn't matter the edition. D&D is the Michael Bay of world building. A badger on meth with a serious concussion could find the holes in your setting if you're using D&D as a world building base.
A badger on meth would
make holes in just about anything.
Seriously, though, you may be right, but 3.x sure came close to looking like you could use it in world building or world simulation. I had rules for how expensive an item you could find in how large a community, gave demographics by class (70% commoner), had classes for not just NPCs but non-adventuring NPCs (and for monsters), etc...
Yes, if it would have been terrible if used that way in too much depth, but it's as close as D&D ever came.
D&D is an ADVENTURE BUILDING system.
Not currently, no. It's a character building system, a combat system, a magic system, and some other-check-resolution and encounter guidelines that might constitute adventure-building guidelines, but certainly not a system.
You could use it as an adventure-building system but you'd get 5MWD murder hobo adventures.
Sounds like a points-of-light setting to me.
Ironic, that.
because you in theory can throw 3 deadlies at the party every day they're out of town doesn't at all mean you have to.
That said, to make restinig work as intended it does make sense to batch them together - maybe 3 deadlies one day, then several days of nothing, then a day with 2 or 3 deadlies, etc.
Yeah, you have a choice, impose a semblance of balance, or pace the campaign how you wanted to, or don't treat the rules for rests as sacrosanct and flex that Empowerment even where it's not so freely given...