Earlier quoted context omitted.
One answer is parsing ambiguities. https://german.stackexchange.com/questions/1705/w%c3%b6rter-... (replaced with better link) English has tons of ambiguities, including many possible parsing ambiguities of this kind, but written English would have many more ambiguities without a delimiter between words.
Separating parts of compounds by spaces prevents ambiguous decompositions, but allows ambiguous groupings. (Like "Time flies like an arrow, fruit flies like a banana.", which would be less confusing if "fruit flies" were written "fruitflies" or at least "fruit-flies".) I'm not sure which is worse.
But written German already distinguishes nouns from verbs with capitalization; can the grouping problem be made worse by spaces in the absence of ambiguities about which part of speech a word is? (Obviously the German convention doesn't totally eliminate all such ambiguities, since "wie" 'like (preposition)' and "mögen" 'like (verb)' are both lower case, although "Fliegen" 'flies (insects) and "fliegen" 'flies (verb)' can be distinguished sufficiently to remove the specific kind of ambiguity present in this particular sentence even if "wie" and "mögen" were homonyms.)
(corrected thanks to commenter below!)