Imagine grading an exam and saying nothing to the test takers about their incorrect answers just because the correct ones are more numerous. The (well-intended) omission can, unfortunately, make people become preoccupied with the unacknowledged errors and thus overvalue their importance. Not to mention that folks won't learn from their mistakes. Frank, properly weighted recognition of what doesn't work makes the emphasis on what does work much more meaningful.
But, you may think, if being super-positive gets everyone to feel good, what's the big deal? To my ear, the main drawback is the creation of so much white noise that when clear, authentic positive feedback is given, it gets muted and loses its punch. Indeed, people may stop believing that others really mean what they say. And a culture can develop in which those who don't gush praise are misperceived as being insensitive or having a bad attitude.