Why caulking around a toilet is a bad idea

In Washington state, caulking around a toilet isn't code. The picture is the best explanation for the code because the caulk prevented the water from seeping out onto the bathroom floor.

Isn't that a good thing, you won't dare ask.

No, noob, it isn't a good thing.

The water was leaking for a long time, but where was it going? Not on the floor, for sure. But, it was seeping very slowly under the tile floor causing the tiles to settle and crack. Even worse is that this bathroom has twenty toilets and most of them have caulking smeared around the base.

Ball Plumbing reset this toilet with new wax rings (took 3 wax rings because the original plumbers screwed up) and removed the old caulk.

No, we didn't recaulk because it is not code for very good reasons.