Trivial and not too silly example:

Part of new feature you had working in an intermediate commit, but broke somewhere along the way and is not working in your last commit when you squashed.

If you catch it early enough, I suppose it's in your reflog, but otherwise you're screwed.

It sounds like a silly example, but I bet most developers have run into this at some point.

With mercurial/jujutsu, you get the best of both worlds: The "argh, let's see if this works" commits are what I call "microcommits", and the squashed versions are the real/public commits. With jujutsu, you get both. Your log shows only the "real" commits (equivalent of squashing all the commits between that and the prior "real" commit). But if you want to drill down into the microcommits, the information is always there.

Let's acknowledge the reality. Many people use git not just for version control, but for backup ("Let me commit this so I don't lose it"). Let's ensure the VC tool supports both and doesn't force you to pick one over the other.