This rule comes originally from Midway/Atari by way of Mark Nau. Specializations of it include: water games are bad, space games are bad.
No surfing, wakeboarding, jetskis, sailing, etcetera. You lose a lot when you confine yourself to the surface of water, and without those boundaries you lose a lot of gameplay opportunities. For example, in Tony Hawk's Pro Skater you can find secret areas where you can do new tricks. In Kelly Slater's Pro Surfing...you can surf. Not to say it's impossible to make a good water game...lots of people liked the jetski game on the Nintedo--note there was terrain there.
And look how much more fun Descent was than Wing Commander. Descent - a space combat simulation with terrain.
This rule applies to computer/videogames where you control an avatar in a world.