I cannot be called a casual player. I'm a Savior of Azeroth, heroic Dragon Soul-geared in my tank and DPS specs. I raid three nights a week. So when I'm telling you those dungeons were not tuned to be friendly for this experience, you can dismiss me as another casual player if you like, but you'd be wrong. Those dungeons were tuned to the point where you needed to have a cohesive group that knew one another and could either communicate quickly or use a method of communication outside of the reach of most PUGs. Especially in the gear that existed at the time. Various methods were attempted to balance this, including a stacking buff for random dungeon groups.
Now Nethaera explains Blizzard's reasoning on why heroic dungeons are rebalanced from time to time, and it's an argument that is easily extended to all content. I don't always agree with the rebalancing efforts Blizzard takes (my opinion on the Firelands adjustments was mixed), but I think the principle behind them is very sound.
The balance here is in making gameplay that appeals to the entire playerbase, which is doubtlessly the native reason for introducing challenge mode dungeons. To be frank, at this point heroic dungeons have evolved into a basic part of most players' character advancement. They're not restricted content only a few players will run to gear up for even less accessible raiding; they're content most of the players will run, and they need to be accessible for those players. Do they need to be super easy? No, and no one's suggesting that. Blizzard's purpose in nerfing them is to make them a balanced and reasonably challenging experience for players who are using the in-game tools provided for them to group and experience content.
To provide content for everyone
Think about a Raid Finder group. It's not balanced for a coordinated group of experience raiders. If you want that, raid the dungeon outside of the Raid Finder. The Raid Finder exists so that a majority of the players can see the content. In this way, challenge modes are effectively the exact inverse of the Raid Finder, a means for experienced, coordinated players to make 5-man dungeons harder for themselves, to push their difficulty level up. If you want it harder than a run designed for five strangers who can only reasonably expect to type out a few lines of explanation between pulls, you run the challenge mode.
When I am running a dungeon with four strangers, I will tolerate several wipes. In my experience, I am unusual in this. From the first heroic dungeon I ran in Cataclysm (Blackrock Caverns) to this very day, I rarely see a wipe without someone immediately dropping group. This increases the frustration and difficulty for everyone else going forward. One time, I was in a group that wiped on the last trash pull before the first boss in End Time because the healer disconnected, and everyone other than myself immediately dropped. I went back to the entrance, requeued the group (which again, consisted of myself) and with four new players, easily completed the entire dungeon. A guild group would simply have laughed the wipe off and continued forward.
Tolerating group failure
Tolerance levels for group failure vary so wildly that a good design simply has to take into account what purpose the content in question is serving. Today, heroic dungeons serve as content for the majority of the game. It's a means to gear up so those players can move on to the Raid Finder and experience more content.
These dungeons are not intended to provide a herculean labor for their groups. When I run them with friends or guildmates, yes, I absolutely destroy them. I've done things to Zul'Aman that shouldn't be legal. But I'm not the audience for such groups. And furthermore, in Mists of Pandaria, if you're a dedicated player of purely 5-man content, you will have a place with these challenge modes. You can excel and demonstrate your excellence. That's good design and allows multiple levels of challenge to exist.
Balance never stops
Blizzard doesn't do content adjustments to cater to anyone. Frankly, the phrases like "catering to the casuals" that crop up so often in these discussions are outright stupid. The people who use those phrases are grinding a rhetorical whetstone and looking for a place to chop, not actually trying to understand the process.
Neth's posts here are remarkable in their candor and their willingness to engage in a positive and respectful manner with people ignoring her points and jumping on the same broken old tropes over and over again. For example, yes, Blizzard has had to come in and rebalance classes, dungeons, raids, itemization and so on throughout the life of the game, and they will have to do so again and again. It will never stop, and it will never be perfect. The act of balancing the game is never complete, and it is not an indictment of the process that it will not be completed.
Furthermore, adjusting the content's difficulty after a period of time to allow more players to experience said content is also not an indictment of the game's balance or evidence of the developers' catering to some imaginary group of players that doesn't exist. Difficulty means different things to different people. Different players have different time constraints, different luck with gear drops, different skill levels, different motivation, and different levels of out-of-game responsibilities that prevent them from spending the same quality of effort. Yet the game exists for all those players. Adjustment over time is the only logical and meaningful way to allow the most players the most fun.
In the end, that's why we all play the game. If you want it to be as hard as possible, there are ways to accomplish that, and more are coming. Leaving it tuned the way it was the first time someone ran a dungeon is not the answer to challenging content. Sometimes it's adjusted because it's just plain broken or simply not tuned for its intended role. Adjustment of content is not evidence of the content being poor; it's simple maintenance. It has always needed to be done and has been with us since the game was launched.
World of Warcraft: Cataclysm has destroyed Azeroth as we know it; nothing is the same! In WoW Insider's Guide to Cataclysm, you can find out everything you need to know about WoW's third expansion, from leveling up a new goblin or worgen to breaking news and strategies on endgame play.