CR was
intended to give a DM a guide as to how difficult a particular monster / NPC / challenge was in relation to an average party. If the CR was equal to the party's average level, it was supposed to be something they could handle but would drain about 20% of their resources - hit points, spell slots, consumable items, etc. The idea was that 5 CR-equal encounters in a day was supposed to be the extent of what they could do, if they expended almost all their resources.
There were a lot of problems, though.
What WotC considered an average party and what most of the community cosidered an average party were
very different. Here was WotC's party (I need to ask you to just trust me on this one):
- A rogue, built to be the eyes and ears of the group, find and remove traps, and sometimes get in an attack or two that dealt sneak attack
- A tank, whether it was a fighter or paladin or ranger or whatever. They were the guy meant to rush into melee combat and swing a big ass sword, or have a longsword and shield (WotC considered those two equal - don't get me started). And when they did that, monsters or NPCs stayed there and engaged the tank. "Aggro" isn't just for MMOs...
- A blaster, typically a wizard focused on using evocation spells but it could be a sorcerer or (later on) warlock, etc. The key here is they spend almost all their spells blasting and very little doing things like save or die, battlefield control, buffing, etc - you know, all the things wizards are good at.
- Healer. Typically a cleric, but other classes like druid could fill in here if needed. The idea was that this character would help the tank, by standing there and alternating between doing an attack and casting an in-combat healing spell to keep the tank up and fighting.
- If the party had a 5th member, it would be a support character. A bard, a ranger, a monk, etc.
- If the party had a druid, he / she used wild shape to do things like turn into a hawk to scout, or a normal everyday animal to fight. There was never the intention of making this the be-all, end-all of melee combat like it was. That's why it was errata'ed so many times - nobody internal to WotC had any clue what wild shape was capable of, and so they reacted to community posts to build the next layer of errata for the ability. But a druid was never ever meant to replace the fighter by being a better fighter. It was meant to be a support role that could help scout, help heal, help in melee, etc.
There's a lot of problems there, obviously. The biggest is resources. WotC never, ever expected that the whole party would have flight, for example, and would sit in the air and use ranged attacks exclusively. That's why you see so many mid to high level monsters with no ability
at all to deal damage or effects at range - WotC expected the fighter to stand there and trade blows with it.
the other big, obvious issue is the design of the system itself. It was
intended to make a group of PCs have roughly 5 encounters a day (more if they fought under their avg party level, less if they went above). But... then they designed adventures - Dungeon magazine and otherwise - that threw them against 10, 15 encounters a day. So right off the bat, they're screwing up the intended resource management.
the other, less obvious, problem is that freelancers and in-house writers weren't supposed to consider source material other than core when writing stuff. (If the book was part of a campaign setting, the campaign setting's main book was also taken into consideration.) That's why you ended up with stuff like Divine Metamagic - when you put that into
just core it's not nearly as broken as when you throw in other sources. (and this is another point that I'm going to ask you to just trust me on.)
There was more to it, of course. But really, it comes down to fatal flaws in the entire design - both the CR system itself as well as how they went about designing splat books and so forth.
Or the TL;DR version: WotC undermined the intended use of CR almost from the start, both with serious design flaws and with poor specs for writers to work with.