Let's start with a question: How much do you play MMOs? I don't care about the actual amount, just take note that you answered with a number that's wasn't infinity or forever (I know forever isn't a number). This means that time is a limited resource. Since time is needed to get any resource, even with respawns there are limited resources.
We all want these resources.
They may be quest mobs. They may be ores or herbs. They may be bosses and the loot they drop. We want the resources and we go to great lengths to get them. We don't like when people get in our way.
Here is a Goldboar. It is a boar that carries a lot of gold. An obscene amount. The amount cannot even be calculated by the server. Kill and loot this boar and you will never have to farm anything every again. It's a rare rare rare spawn, meaning there is only one, ever.
Scenario A: Competition
The Goldboar is very easy to kill. A few hits and it's dead. In this scenario you don't need anyone else. Given the desirability of the kill, you don't want anyone else. Other people are a problem. So you're in a rush to tag the boar and you're going to be very mad if someone beats you to it.
Scenario B: Cooperation
The Goldboar is very hard to kill. A few hits and you're dead. In this scenario you need someone else. Given the desirability of the kill, you don't mind splitting with someone else. Other people are a solution. So you're in a rush to find someone to work together with and you're going to be very mad if you're all alone.
Scenario C: C&C
The Goldboar is very hard to kill. A few hits and you're dead. In this scenario you need someone else. Given the desirability of the kill and the fact that it drops all the gold in one bag rather than a pool that is automatically divided, you don't have to split it with someone else. Other people are a problem. So you're in a rush to find someone to work together with, and then take it all for yourself.
Scenario D: C vs. C
The Goldboar cannot be killed, but is instead a chest filled with gold. Other people are your competitors for the gold. But you can also cooperate with some of them. By cooperating competitively you can ensure that your side gets the gold.
We see all four of these in WoW. Competition is most easily seen in outdoor mob and resource spawns. Cooperation is seen in group quests or instances run for badges. C&C is seen in situations with loot, where we must work together to get access to the resources, but once the boss is dead, we're now in competition for the drops. C vs. C is most common in PvP where we work together to beat another group for resources.
Scenario A isn't going to be very good for a community since it turns us all into enemies. Scenario B is good for a community, but suffers from the problems of trivial zerging or challenging but exclusive pre-set group sizes, the latter of which turn group membership into a scenario A resource.
Scenario C is possibly the worst for a community since it encourages backstabbing and ninjas. Cooperative effort for individual gain just isn't very popular, except for the one getting the individual gain. Players can attempt to work around this by forming static groups and using some variant of turn-taking (that's essentially what DKP is), but if individual mobility is too high, then it will degrade. These are your guild raids compared to your PUG heroic with ninjas.
Scenario D as I've seen it is the foundation of a strong community. Shared rewards for shared effort bring people together. Ninjaing and backstabbing are rendered moot. Peace love and harmony. Well...
Scenario D is a badge run. We kill the boss and we all get something. Somehow it doesn't work out like that. We become very focused on the punishment for failure rather than the reward for success. We become focused on identifying weak links and removing them, somehow giving little time to strengthening them.
Badges should be perfect for a community. Why are they not?