You know, I think that for me the fundamental impact of the spell on story-telling are far more troubling than the minutia of the in-game effects.It is an *excellent* scout. Why would a wizard ever *not* scout ahead with this spell? Information is power. And logically the rest of the party would want to know what's ahead instead of charging in blind. But it's not as fun a gaming experience to have the GM describe the "adventures of the eye" in most sessions...
[I'm a huge advocate of reconnaissance, so take the below as a list of exceptions and not a slam on the utility of Arcane Eye.]
Why would a wizard NOT scout ahead? Because 1"-wide eyeballs don't fit under doors, and cannot open doors.
It becomes markedly more useful if paired with, say, an invisible Imp familiar who can open doors. But then it is also somewhat redundant as well.
Other potential reasons not to scout ahead with Arcane Eye:
(1) Because the Shadow Monk and the Lore Bard have already done so, and the Shadow Monk (unlike the Wizard) has high Wisdom, while the Lore Bard (unlike the Wizard) has Expertise in Stealth and Perception, so both of them are markedly better than the Wizard anyway at noticing things while scouting.
(2) Because your concentration is busy on something else, e.g. keeping the aforementioned Lore Bard Invisible while he scouts.
(3) Because the area you're in is active enough that there is either no time for scouting, or no point in scouting because the situation will have changed by the time you get there. Think here of e.g. a military base with patrols and soldiers moving everywhere. Even if you hole in up a cargo container and send out your little spy-eye, all you're going to get is a bunch of information to the tune of "a patrol just went that way... another patrol is coming this way..." etc.--you won't find a safe path that is free from patrols because the whole point of patrols is to make sure no such path exists. (Or maybe you will find one, over the rooftops, because the Evil Overlord forgot to guard against flying enemies. In this case #3 doesn't apply.)
(4) Because you can't afford the 4th level spell slot.
So, it's a cost-benefit tradeoff. Recon is important, but sometimes you can get the same thing cheaper some other way; or you can't afford it at all.
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