The gamification was a key reason the site became popular, but as the site grew, the rules and game mechanics did not evolve.
An edit that made a response worse should have knocked the mod down so that they were unable to mod any more. The quality of the edit should have been determined by the original author. "Did this edit make your question better?"
Moderators should have been ranked and scored based on their ability to help and welcome new users. It should have been very costly for them to make a new users feel unwelcome.
Being able to edit answers isn't even a mod thing. In fact, for most of SO's life, it wasn't even a 'being logged in' thing (you could just edit an answer anonymously). How they wound up with a Q and A site where you could edit another user's answer far more easily than leaving a comment on it I still will never fully understand.
(this kind of thing IMO really added to the utterly arcane set of rules and conventions that makes it feel so inaccessible)
> An edit that made a response worse should have knocked the mod down so that they were unable to mod any more.
Literally everyone on the site is permitted to propose an edit, and everyone with at least 2000 reputation can make unilateral edits. The proposals are approved by a 2 out of 3 majority of random unilateral-edit-privileged users. None of this is considered "moderation" and is not done by "mods". Of millions of Stack Overflow accounts, only a few dozen have ever actually been moderators, and they do a tiny share of curation. Their main job is responding to flags.
> It should have been very costly for them to make a new users feel unwelcome.
The overwhelming majority of people who came to the site wanted the site to be something that it was fundamentally not trying to be, and often something it was fundamentally trying not to be. It was correct to make such users "feel unwelcome", because experience has shown that they typically cannot be reasoned with or explained to. The statistics make it clear that most of them never had any intention of trying to join a community (or, say, ask another question after the one that motivated account creation) in the first place.