Explosives in D&D - good, bad, or ugly?

Mostly it is an issue of flavor. Addition of things like explosives to a fantasy setting increase the 'grim and gritty' factor by a high degree. 'Grim and gritty' flavor tends to favor grim and gritty mechanics, which favors a high mortality rate and avoidance of combat.

Someone on the board has noted that any creature with a heavy crossbow is at least CR 1/2. How much higher does the minimum CR rise if the creature is armed with firearms and explosives?

How does the utility of a Wizard in the party decrease if everyone in the party has access to area of effect weapons?

However, the biggest reason that I've always avoided the introduction of gunpowder (or something analogous to it) is that it enherently introduces modernity to the game. Unless you setting is already clock-punk or steam-punk or some other non-classical fantasy setting, this causes players to behave in non-desirable ways. Typically, if you open the door to modern techonoly, players will start working to introduce modern techonology at every point. Pretty soon you end up with Shadowrun whether you want it or not.
 

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