An issue of tactical voting is that it polarises the debate. An issue of tactical voting is that lessor candidates never stand a chance and the two dominant parties can fight among themselves. An issue of tactical voting is the power it grants to opinion makers (like large national newspaper groups). An issue of tactical voting is that the other issues have some nasty side effects.
When engaged in tactical voting a person makes an assumption as to which candidates or options are the most likely to win and then votes against the one they want the least by voting for the other one. This results in the most popular options being the only options.
To draw the first of many examples from the UK this has meant that the favour of one man Rupert Murdoch (who owns most of the news outlets) could pretty much decide the outcome of an election. But failing that he could polarize the vote into a choice between the strongest contender and the one that they are standing against. This has resulted in "swing" seats that flip-flop back and forth between Labour and Conservative and attract BNP and other extremist candidates to stir up racial tensions and sometimes capture the swing vote.
Another example of this in the UK is the three leading parties. Conservative (sometimes called The Tories) and Labour have traditionally represented the right/left balance with Liberal Democrats occupying the middle. By popularity it might be natural to think that any of the three might win. However Lib-Dems are seen as the "also rans" and so supporters often choose one of the other two parties to block the one party they really do not want.
In fact sometimes a candidate when up against a stronger opponent might remind the swing voters "a vote for Lib-Dem is a vote for the other guy". Thus voting with your heart is seen as wasting a vote.
This has resulted in a situation where campaigns are run on tactical seats. These are areas where there is a chance of swinging the vote in favour of the party seeking election. The by product of this is that only certain wards "matter" in the national elections. Additionally only swing groups within that ward are targeted. These are called "key demographics" and it can meant hat the entire election in one are might be seen as pleasing the LGBT community or the Asian community or some other clearly identifiable group.
Some American elections are all about who wins the hearts of the "bible belt" meaning that for all it should be separate religion is the deciding factor in the election.
This gives a disproportionate amount of importance (and thus power) to the issues that are important to those communities. This can make an entire election about the candidates trying to please the same group of people that does not include you or anyone you know. You simply do not matter to the candidates. Your vote is irrelevant.
This also means that just by convincing the public that something is true can make it true. Take the last UK election. The Lib-Dem leader was able to get equal air time with the other two leaders and being charismatic and seemingly fresh people responded positively to him. Public opinion was then that the election was a contest between Conservative and Liberal Democrat with the incumbent Labour seen by some as the hopeless case. Lib-Dem supporters therefor all voted Lib-Dem and many wards saw the swing voters divided between the two other parties.
Rather than the swing from Labour to Tory which is expected when Labour hold power the swing went from Labour to Liberal Democrat and The Conservative and Liberal Democrat parties were required to share power which for the UK is unusual.
Another example is in so called safe seats where a party has sufficient signed up supporters that they will win without effort. In such cases there is no option but to vote for the incumbent's strongest opponent in the hope of reducing his or her margin and sending a (weak) message about what matters to you. The result is that there appears to be almost no support for any other political perspective and the debate in that area becomes polarized.
This is spectacularly demonstrated in US politics where the FPTP (First Past The Post) elections effectively devid you between Republican and Democrat. Fringe parties are not seen as legitimate by voters and the rich array of political choice is lost. The side effect of this is that all issues are presented as an either or question and the voter left to choose one bundle of answers or the other. The only mitigation of this is that voters are sometimes involved in candidate selection as well.
Where tactical voting is reduced however we generally see issues which have far more moderate proponents and the extremes rarely show up. In the UK at the moment the right wing Conservative party are running a private crusade against benefits and claimants this will go on widening the rich/poor divide. Previously the Labour party went on a pro-benefits reform crusade and championed the "Every Child Matters" program with a view of attempting to eradicate child poverty. There is no reason to think that they will not do that again when they get into power next and no reason to think that the conservative party will not run another war on the benefits system when they take power again. At no point does it make sense for either party to say "hey let's get the balance right here" as that would be too moderate and give ground to the other extreme.
A further problem arises when both the strongest candidates are seen as morally reprehensible. In STV and PR systems lack of popular support would become quickly apparent but when faced with voting for a moderate candidate and voting for a known racist in order to prevent another known racist with plans to support "camps" to keep ethnic minorities in who do you choose? Okay so that is an extreme example but tactical voting means that moderate people may vote for a bad candidate to prevent an evil candidate from winning. Or more commonly vote for a bad choice to prevent a very bad one from winning.
Tactical voting also results in changes to the way campaigns are won and opponents are treated. The first part of any campaign is to convince voters that the candidate has a chance of winning at all. If you cannot then votes for that candidate are "wasted votes".
This style of campaigning means that you must aggressively attack all other potential candidates on past record or party record or something and show that they are bad choices. This leaves all the candidates looking like petty minded bad people and voters wondering why no one has anything nice to say about the candidates.
All sorts of nominally or unrelated trend data is used and abused to bamboozle voters with claims of who might be a likely candidate and setting the choice as between your candidate and the unwelcome one. This makes the politics setting seem really complicated and clouds the issues with complicated looking mathematical discussions.
Tellingly a candidate must attack most fiercely the other candidates whose opinion are most similar to their own. This makes candidates look like hypocrites and puts people off voting at all. In Thanet where I live a local election is lucky to see 30% turnout due to this sort of dissatisfaction.
When dissatisfaction is high enough those parties with enough money can buy a win (where there is no spending limit). It also means that a party simply needs to appeal to one or two niche groups that still vote and can ignore whole demographics, ethnicities and issues as they lack voters that can be said to "matter".
In areas like mine this also allows the extremists to slowly gain a foothold. This happens because candidates slowly push out towards the extremes in order to find topics and issues that they are different on. When the extremists move in they can do so by expressing some common sense on what should be fairly middle of the road issues. They play down the more alarming parts of their background and seem to be a breath of fresh air.
Another problem that can happen is that all activity connected to the word politics becomes about confrontation and conflict. It becomes important to never, ever agree with the other party. If they try to do something the opposition must dig their feet in and do their best to protest and fight it. Thus they can be seen as the saviours and win votes at the next election. In some local councils in the UK this has resulted in local authorities that can do almost nothing by themselves and every council meeting becomes a war-zone over every issue. This happens where I live. The upshot is that only the most hard nosed candidates survive very long and I am sad to say this is usually because they lack empathy, interest or morals. The ex-leader of the council is currently serving a prison sentence for corruption in a public office and no one was the least bit surprised that he was charged.