In my youth, around 15 years in past, the first big online games were created. Counter Strike, Warcraft 3, Unreal Tournament, just to name a few. The IT infrastructure, especially onlineservices, were just in creation and needed a lot of work and money.
Because of this gaming companies published two sorts of online servies: dedicated servers, that could be hosted by anybody, and direct peer-to-peer connection between players. The later option was (and is - hello Nintendo!) not loved by players, as the experience is limited by the player with the worst connection.
Serious gaming via internet happend on dedicated servers. Every clan had an own server, bigger gaming communities too. In game you selected the server and played there, following the server rules. Often server owners could adjust the games a lot. The other gamers where random ones that joined this server too, but mostly the was a know group of players on the servers. A small community that got to know each other fast and talked a lot to each other. Cheaters were detected fast and banned.
Today, dedicated servers or a server browser are rare. Most developers providing the servers for the players and selects the server for them. For the gamer it got easier to join a game, click2play. Developers on the other side keep the control over their online game. Cheaters get banned globally. But the players are dependent on the service provider. No own rules, not future-proof. When there servers were shut down (and then will be shut down), then the game is dead. A current example is a list of older Ubisoft games, where the servers and with them the online play were shut down (IGN-News). UT2k4, now 18 Jahre old, is running fine until today.
Nevertheless are there benefits of automatic matchmaking. Ideally you aren't joining empty servers and have to wait for other players. And of course Skill Based Match Making, short SBMM, the initial content of this post. Many forewords to get here.
What is SMBB? With SMBB the skill of a player is measured while he plays. The more points, kills or wins a player has, the higher his Elo. The matchmaking now tries to find players within a similare elo range and get them together in a game. With this they prevent that rookies and pro have to play against each other. Less frustration for rookies, less boredom for the pros. Theoretically.
When there are many gamer in a game, then the system is working really well. When there are less then the waiting times are long or the system has to be loosend. Options are bots or a wider search, so an increased Elo range. If the range is increased, rookies and pros will match each other again and are overwhelmed or bored.
But let's assume the playerbase is big enough. The pros fighting each other, develop new tactics and improve. The normal players play against other normal players. Everybody meets players that are playing like themselfs. Sometimes there is a win, sometimes there is a lose. It's fun, because it's equal. But do you learn something? There are no superior gamers with clever tactics or who surprise with great skill. There is no way to learn from better players. You will be demanded, but never going to your limits. When another player is running in my bad layed traps in Rainbow Six: Siege, then I'll never search for better positions. If the enemy is aiming as bad as me, I don't need to improve myself.
With SMBB there is no automatic improvement, at least not every fast. Every improvement has to be initiated intentionally. Often players are watching the gameplay of pros on Twitch or YouTube for this. In the game itself you need to improve active, but you won't learn by the way or out of the need to compete. Only when you're at your limits you need to improve.
But to all players like to imprive? There is the problem. I don't think so. Developers like to reach as many players as possible. For this the game has to be fun in first place. Not just for hardcore players, that can invest a lot of time and energy in a game. Millions of gamers just play FIFA for fun, not as competition. Playing chilled one or two rounds in the evening. The game has to be fun, entertaining and provide success. The enemy has to be not to weak and not to strong. Lose tight or win tight is okay. Lose clearly or stomp the enemy is getting bored after some games.
For whom was SBMM created? For the majority of the gamers. For the gamers that just want to be entertained without beeing part of the competition. They don't aim for the top, they want to win sometimes and lose sometimes.
Personally I'm in a dilemma. I grew up with dedicated servers, in an environment where everybody had improved himself automatically and where you got stomped. SBMM is gaming light in my opinion. Something for the casuals, the noobs.
But I work, I have a private life, I have less time to play. The daily life is demanding, I have to improve myself every day and there is enough trouble for me. Gaming is my time to relax. I want to lay back and have fun. With and against other players. Sometimes I want to win and I accept to lose sometimes. But I don't have the time and energy to constantly improve my gameplay. Analyse tactics and mechanics and train them.