A little while back, my buddy Dave brought up a very good point that cuts across nearly all editions of D&D.
Why do we get experience points for defeating monsters and looting treasure? (Certain newer editions only for the defeating monsters part.)
If I'm a Cleric, how does lugging gold out of a hole in the ground make me better at turning undead?
If I'm a Fighter, how does finding a diamond make me better at sticking things with my sword?
If I'm a Magic-User, how does throwing flaming oil make me better at casting spells?
If I'm a Thief, how does beating up kobolds make me better at opening locks or finding traps?
It's pretty illogical.
2E (which, I believe, Dave started with), used a system where only warriors got XP for combat, spell-casters for spells, and only thieves for using thief skills or finding loot. It makes sense from the perspective of real life, where practice makes perfect.
It's also a pain in the ass to track.
And it's ALSO also illogical from a game perspective.
If I'm a Cleric, why should I waste time battling anything besides undead? And once I've got spells (assuming a Classic game where there are no Cleric spells at 1st level), why would I go off to dungeons when I can get XP just for going around town healing the sick or purifying the slum's water every day?
If I'm a Magic-User, again, why risk my weak ass down in some ruins when I can just set up shop selling my services, and gain XP for translating documents with Read Languages and hauling loads with Floating Disk?
If I'm a Thief, as above, why risk my fragile self battling dragons when I get XP for sneaking around town, breaking and entering, and fencing the goods?
At least with the Fighter, there's some incentive to actually adventure. It's less legally questionable and more lucrative to battle monsters than townsfolk (although if there's a war, an enemy soldier is less likey to be able to turn you to stone or fry you to a crisp with his breath).
So the 2E approach is realistic, in some ways, but it's really just as illogical. D&D is an ADVENTURE game. Sitting around getting XP for casting Plant Growth on Farmer John's squash patch isn't very adventurous. Also, if everyone's got all these various things they need to do each adventure to advance, you get what the Forge folks call incoherent play. The party doesn't want to work together, everyone's out to do their thing first and foremost.
The simple XP system of some XP for monsters, a lot of XP for loot works because it's something everyone in the party has a vested interest in (getting the loot is good no matter who you are), and it spurs creative, adventurous, cooperative play.