Good way to view it. Now if only people would use that idea in some way besides making monsters harder in each section, so you can only visit sections with monsters that you can handle until you are strong enough to go to the next section. That's all I ever see...
The major problem with this is that there are two sides to this debate.
The first makes all monsters of equal strength to the players -- it removes all sense of accomplishment, but it allows players that are sufficiently prepared to travel anywhere throughout the world, while still preventing people from having infinite flexibility and not realising their own mortality.
The second follows the format you just described -- players gain more and more strength, which gives them a sense of accomplishment. But once the players have battled everything else, they're powerful and have nothing left to do, and more and more even more powerful things have to be created to give them a challenge. If a new player challenges a tough monster, game over, unlike the first example.
The same applies to just about every game aspect: monsters, weapons, environments, quests etc. Environments can get old. Equipment can get stagnant. Monsters begin to present no challenge. Quests are all completed and there is nothing left to accomplish.
I believe there was an earlier thread quite a few months ago that detailed that unless there is a way to lose items, players will get more and more rich things as they are brought into the economy, and the ordinarily powerful weapons are discarded casually, which gives the new players access to much more powerful equipment than is originally intended.
It is much like a spiral staircase leading upwards...
The shameful reality of it all is that a computer cannot replace a mind. Unless you give a computer a mind, that is capable of creatively adding to a game every time someone accomplishes something, a designer is resigned to spending much of his/her time moderating and continually adding to a game. This is one of the reasons I tend to never consider a game "finished"... merely "no longer being worked upon".
(And, as most people are -- or will be -- readily aware, I am rather poor at deciding when to "no longer work upon" a game of mine.)
This is the reason I'm a fond supporter of Perma-death, so that you don't have players that have the best of everything, have completed every quest and vanquished every monster...
The idea is that you make your character, have fun with it until some big bad monster stumbles into town and eats him (or something), then you make a whole new character and have fun playing him differently than the first! Until he slips off a cliff and turns into floor mush. Then you make another one and play differently than with the other two! Until a group of bounty hunters from the other city decides your head is worth something. Then you make another character!...