There’s a certain school of GM thought that says you’re not doing it ‘right’ if you’ve never had a Total Party Kill; at one point this was a dead serious and far-ranging school of thought in the hobby, and there was a certain feel that the GM and the PCs were adversarial. The GM, of course, has to self-limit, because GMs have absolute power over the game world. There’s nothing stopping one from pulling the eternal joke of ‘rocks fall, everyone dies’ save that such a GM will quickly have no players left.
On the other extreme, there’s the Monty Haul style of GMing, where players are rarely challenged by anything, treasure and experience and other rewards flow like water, and if anything really threatens the players they’ve probably got a god waiting in the wings to save them from doom. While it might be fun once in a while, this pretty quickly gets as boring as most of the adversarial games where the GM seriously thinks he’s the foe of the players.
Neither TPKs nor Monty Haul games are much fun for extended periods; the GM generally walks a fairly narrow line balanced between mild forms of the two extremes. What’s fairly easy at low levels – if a challenge is too easy, the enemies get some unexpected backup, if it’s too hard the creature turns out to already have been wounded – becomes harder as characters gain in power and groups develop and refine their tactics. What was a case of a front-line fighter charging back and forth to keep opponents focused on them while the wizard lobs plinking spells from the back gives way to combats opening with earth-shattering explosions of magic and the charging warrior plowing through entire squads of enemies as they try to pile onto the character.
The GM’s job becomes increasingly tricky, as most groups become finely tuned to the point that anything they’re expecting will get torn apart, but things coming at them from the side will take them down like a cat pushing glass jars off a shelf. With luck, the players can recognize a situation gone bad and retreat when they need to do so, retooling their approach as needed, but sometimes that won’t be the case and the GM is faced with the choice between a ridiculous Deus ex Machina event or a TPK.
I tend to lean toward permitting the TPK, on the grounds that a party being wiped out doesn’t mean the story – or even the party – is actually done for. Many methods exist for letting players keep going with a few tweaks even when it seems like they’ve been wiped out. Enemies might stabilize them and drag them back to be tried according to the laws of their people. They might arise as the living dead, a hunger for revenge burning in their otherwise still hearts. Less cautious foes might loot them and leave, assuming that they’ll bleed out, only to have the characters awaken, stripped of their gear and miles from any kind of safety, their only hope being to hunt down those who nearly killed them and reclaim their belongings.
Or you might give the players themselves an option; if there’s some great conflict between good and evil, light and dark, law and chaos, or whatever, the godlike beings involved might be championing the characters and turn up after they’ve died to offer them a choice – remain dead and continue on to their reward, or go back to all the strife and pain of life to keep fighting. What you shouldn’t do is force the choice one way or the other, in this case – and not to make a habit of it. Gods only intervene for the greatest heroes and villains, and anything less than that cheapens dramatic moments that can make stories that get told for years.
As always, GMs should err on the side of the best story; sometimes that means finding a way to save the characters, sometimes that means rolling up new characters to go get revenge for the lost, and sometimes it means recognizing that a game is done and moving on to the next campaign.