1) If you make a mistake the damage is permanent imediatly, the system can't protect you. For example I once did rm -r .* in my home dir. If I had been root it would have wiped out my entire disk. Since I was working as a ordinary user I only lost the files in my home dir.
2) If you run user app's as root you give them total control over your machine. Say you're surfing the web with for example mozilla. Now you visit a website on which some bad guy has included a malicious program that attacks some security problem that was discoverd in mozilla. If you're root, he has total control over your machine and can do whatever he wants. Like install spam software, or use your box to do illegal stuff or the like.
Using sudo and su it's easy to become root when it's necessary. So there's really no reason to work as root.