Was just watching a speedrun of a King's Quest game and noticed that, whenever the player leveled up, they'd get a full heal. This, in turn, allowed the player to pass some poisonous swamp that they probably shouldn't have been able to. In general, I've always felt that this mechanic doesn't make sense, and it feels like it disrupts the effort a casual player puts into managing the character's health and resources.

So, my question is, why did they implement this mechanic in the first place?

(There's also, of course, the question of why there are levels and experience points in a King's Quest game in the first place.)

It's an old game, I'm sure Ken and Roberta (or their programmers) had seen other RPGs use this mechanic and just thought it was the way to go. I'm playing through it now and it saved my ass in the swamp. It's too bad for speedrunning though, because without that mechanic speedruns would be far more interesting as players would be forced to level more before getting to the swamp.

I doubt much thought went into that part of the design.

I take it your question is specific to the King's Quest game, since the mechanic is fairly widespread and may derive from technical or programmer shortcomings for the early gaming systems.

As a casual gamer, it is an exploit that I use whenever it is available without too much guilt, but then again I have no problems playing games on the Easy and Story settings, since I have little interest in button mashing. (If I like it I will usually play subsequent games on more advanced settings, just to make it more interesting. This can help balance out overly random damage.) One of my best play-throughs of Shadowrun: Dragonfall was on the hardest difficulty; I was able to chase off the main antagonist in the introductory battle because he was walloped by some low-percentage high-damage, super-critical hits. (He notified command, called for more back-up, and ran away! :) The Shadowrun franchise is one that does not implement the full-heal-on-levelup mechanic-cum-exploit.

I use it a lot in e.g. in Star Wars Knights of the Old Republic as an alternative to reducing the difficulty for some of the trickier fights, too, since I tend to keep at least one levelup spare in case I need to improve a rank in a skill or add a feat or power that I have forgotten I needed.

But it is an exploit, for sure. The classic games like Baldur's Gate will remember your injuries AND respawn nearby enemies upon restoring a game save. I learnt this the hard way, since I like to make a save point whenever a character in the party reaches an uplevel threshold, in case I make a mistake in choosing their new attributes, but this strategy needs some adjustment for such a situation since. (In Baldur's Gate, especially, following the main story, rescuing Dynaheir, the group reach such a moment in the last areas of the Gnoll stronghold. After reloading a save made here, the group on the way out will have to re-fight all the battles they had already fought on the way in.)

As for the why in the first place, the game you are thinking of, King's Quest: Mask of Eternity, was a late Sierra game, at a point where most agreed that there was no real commercial future in classic adventure games (though a few European companies held out for a while, in many cases producing what I view as abysmal adventure games, but in a few cases true classics like The Longest Journey and Syberia. But back to this...)

Therefore, for its next (and it turned out last) King's Quest game, Sierra decided to do an action adventure (with definite RPG elements) instead. Instead of relying on specific plot points from existing fairy tales or myths, they (which I assume means foremost Roberta Williams) decided to draw on the general spirit of mythology, perhaps drawing on some of Joseph Campbell's books, such as The Hero with a Thousand Faces and The Masks of God. Although I'm not sure, because I've played so few of them, I think Mask of Eternity was also intended to have something of the feel of a Western-made 3D JRPG, as well.

The game departs so heavily from some established King's Quest assumptions, in particular that non-violent solutions are preferable (though this was rarely an utterly hard and fast rule in the series) and breaks with established King's Quest orthodoxy (i.e. canon) so much that I sometimes have difficulty thinking of Mask of Eternity as a King's Quest game at all, despite the minor presence of King Graham and Castle Daventry or that Part 1 of the game is set the Kingdom of Daventry. However, I nonetheless have fond memories of the game. If you just ignore the "King's Quest" in the title, it's actually a pretty good game.

By the way, if you're ever interested playing AGDI's very creatively unorthodox and very high quality fan remake of King's Quest 2 called Romancing the Stones (the remake, that is), the developers found a way to incorporate Connor into the game, and thus their version of the series, at one point.