I know for older FE players who play "No Deaths", it's just natural to auto reset when someone dies. The difficulty is found in keeping all your units alive. You also grow attached to your units, as Fire Emblem is heavy on characters and their development, if you press through when characters you like die, you're missing on their development through story, supports and level ups, and that's one of the best parts of almost all FE games.
I understand why Casual is an option and how its inclusion was likely a strong factor in Awakening's success, but it just does not feel fun to me since it makes a strategy game lose its strategy. Strategy was what made me love FE in the first place, and if you take it out, what are you left with? Like someone mentioned before, you can get forget tactics and send your units on a suicide run on the hopes they take out a few guys if you're really stuck, versus a traditional FE strategy of retreating back and using tactics to try and survive with no casualties. If you do that with half your army and have them come back alive next chapter like nothing happened, that just takes away the difficulty.
In any case, it's good to see Casual added in as a choice for people who want to play the game that way. The more exposure the series gets (and it's getting a LOT now thanks to Smash and Awakening/Fates), the better.