To me it seems like designers implement grinding to maximize game time for the content they have. Or in the case of freemium style games, to sell additional content. Like in many subscription based games they will have just enough beginning game content to rope people in, but once mid-game rolls around it starts to slow way down and grinding commences, like RIFT at least used to be. Likewise with freemium games, they will give you enough content in the free to play version, but that's really only a percentage of the full game. Then the other 80% you have to pay for, a la Runescape.