Why do inspectors make a big deal about downspout extensions being too short or missing?

When a foundation is being built, the impervious soil needs to be broken up beyond the point where the foundation will be poured. When the soil gets added back around the foundation, this is known as backfill. This soil is less compacted compared to the impervious soil around the property. When a downspout extension reaches the impervious soil, the water will fall off and away from the structure depending on the grading. 

However, when there are no or short downspout extensions, the water is likely to get caught up in the softer backfill soil, which can redirect the rain water directly to the foundation. The water then deteriorates the materials and cracking starts to happen.