There are 2 main reasons why people think its a bad idea.
1 - Extreme Liquour to Grist ratio will effect the wort fermentability
2 - Lousy efficiency due to not sparging
Here's why they aren't really a problem.
1 - I can and have gone into lengthy discussions about L:G ratios. Mainly, people seem to be concerned about Beta Amalayse enzymes becoming denatured too quickly at such a high L:G ratio; and leaving you with an overly dextrinous wort. Then again, others say that a thin mash leads to increased fermentability, and therefore BIAB worts will be overly dry. In a way, they are both right. Both these things are a concern. BUT, in practise, they seem to balance themselves out and worts well within the normal range are produced. Even at the L:G ratios involved with BIAB, still by far the biggest influence on wort fermentability is temperature. To be on the safe side I mash 0.5 to 1 degree C lower in temp than I normally would, and haven't had problems yet.
2- Everyone thought that the efficiency would suck. Even those of us who were working on developing the technique (I take VERY little credit, its all other peoples work) Strangely however, the actual efficiencies achieved seemed to be quite comparable to low end batch sparging results. People were getting mid 60s to 70% efficiency. When we refined a little and realised that with the bag acting as a filter, you can mill your grain exceptionally finely, those results leaped up to the mid 70% range. For low to normal OG worts I calculate my recipes on a brewhouse efficiency figure of 75% and for High OG worts at 70%. It WILL drop quite dramatically once your grain bill starts to get realy big. But the same holds true for batch sparging. If you make sure you mill or get your grain milled to the finest possible crush and you make sure to heat the mash up to a good mashout temp and stir it well. Your efficiency should be pretty comparable to batch sparging in a normal AG set-up
The actual limitations of BIAB are:
Batch Size - Its all gotta go in that bag, which you have to lift out, which has a finite strength before it breaks.... and you also have to fit everything in your kettle at once. So, much bigger than 5gallons and BIAB isn't the appropriate method
Step Mashing - While you can add heat to your mash tun, because of the volume its less like steps and more like ramps. the couple of guys who have tried it haven't been too thrilled. But I'm sure that a way could be worked out. It just hasn't yet.
Maybe no "Extreme" beers - As stated above, BIAB has the potential to be unkind to Beta Amalayse enzymes. If you are planning mashes at the extremes of the acceptable mashing temp ranges, or if you are using really significant amounts of adjunct that need to be converted. Then maybe BIAB wont do the trick. This hasn't been tested, but certainly it would be playing to the method's weaknesses