There's no arguing that presenting the fly a long ways out definitely has its advantages.
It allows you to reach more distant spots that may be fished less, and if you're stripping the fly you can cover a lot more water in one cast. Particularly when fishing in open water where the fish may be very scattered, or in situations where the fish can be very spooky, I'll use longer presentations as a way to maximize my odds for success. However, most notably when fishing around cover/structure or along a bank, I much prefer to keep my fishing distances in more of a short to medium range. There's several reasons I feel more confident doing this:
Thoroughness/Accuracy: Fishing my fly at shorter range allows me to thoroughly pick apart structure, cover, and holding water. While some anglers may just kind of blow through a particular hot-looking spot with a couple of casts, I like to spend some time there and hit every square inch. From a long cast away it can be harder to accurately dissect a particular spot and your visibility may not be as good. Nudge in a little closer and you may see a submerged rock, piling, or other fish-holding goodness that you didn't know was there.
More Casts: If just a small area is likely to hold fish and you're casting to it from a great distance away, you'll probably have to strip-in a bunch of line before you can pickup and make another cast into "the zone." Since you're dealing with less line on a shorter presentation, you can pickup the line sooner and make another cast much quicker.
Stick 'em: You'll be more keen to strikes at closer range because your feel increases. In some instances, you might even see the fish eat the fly before the strike is felt. With less line out, hook-setting is also easier, quicker, and more powerful thanks to the shorter distance and less fly line stretch.
Fish Control: Small fish or big one, when I hook a fish I'd much rather have it be close to me than a great distance out there. Not only is the hook-set better, but your pulling power and use of angles while fighting the fish will be more effective at short range. In addition, if the fish takes off you'll have a little more line/backing left on your reel at the end of the run as compared to if the fish started its run from a greater distance out.
Staying close is especially important to me if fishing around things like pilings, stickups, or weed beds. A fish can be more easily steered clear of danger or even followed more effectively. Also, holding your rod up high during a close-range battle gives you a sharper line angle that can keep much of the line well off the water's surface and away from possible damage or tangles from obstacles between you and the hooked fish.
Many people I've boat fished with over the years seem to prefer staying well outside of certain fish-holding areas while making very long presentations. During many of those times, I've often felt like we were missing fish due to not being able to really reach what I thought was the absolute meat of the fishy zone on some casts. To each his own, but I've always liked positioning myself closer if appropriate for the given conditions. In my personal observations, some species in certain areas absolutely do require you keep your distance, but on the flip side, fish often seem to just not be as sensitive as some anglers think. However, regardless of the species or place, I make it a point to be extra careful and quiet about my presence when getting closer to my quarry!