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The difference is between winning, and accomplishing something.
Say you lost a soccer game, but you got good exercise, had fun, and picked up some pointers to improve your skills in the process--then you accomplished something. But if you played against a bunch of six-year-olds and kicked their asses without trying, then you didn't have to work out much, you didn't improve your skills, and if you had fun doing it you're a bit of a sociopath. You won, but you didn't accomplish anything.
I do understand the much-hyped fear that children today have their self-esteems coddled, and in situations where letting "everyone win" also equals not encouraging the kids to accomplish anything for fear of failing, then yes, it's a bad thing. But winning can be dangerous along those same lines, because it tells the kids they've reached their peak, there's no point in trying harder because they're already great.
Accomplishment with or without winning are both okay; winning without accomplishment is not something I ever want my kids to do.
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