Originally Posted by RampantCoyote 
Simple positive feedback example - a side-scrolling shooter. You get levels which are insanely hard UNLESS you are good enough to get the power-ups… in which case, it's actually easy. Your power-ups have you shooting a zillion bullets per second, wiping out whole waves of enemies in moments - they hardly even have time to shoot.
So if you are fairly skilled, the game gets easier.
But woe betide the player who isn't good enough to get the pick-ups. The level is going to be much, much harder for the unskilled player. So the difficulty is always about the same regardless of your progress in the game.
That example, which I have found in playing console / arcade games on the PSP, is exceedingly frustrating - either the game is way too easy or way too hard depending upon which end of the skill spectrum you are on. Making it inherently the worst sort of balancing job.