"Monetization" is a very hot word in game business right now. It means, when it means something at all, how to get people to pay for stuff. A big question is what you're getting people to pay for, and there's an important distinction here that relates to almost the same problem in game design. And that is "Winning" versus "Fun".
The problem has cropped up in game design in any game that has a goal or objective. Once you give people a goal they're going to want to complete it in the most efficient manner they can. Even if in doing so they're avoiding the "fun" way to play the game.
Their are numerous examples of this happening in game design. Often this happens in poorly designed combat systems. If one move or weapon is always the best option then people will tend to use that all the time, breaking down all that hard work a game designer might have put into everything else.
E.G. in the game Resistance 2 there was a gun that allowed players to see and shoot through walls. So players would enter a level, shoot every enemy in it, which wouldn't even move thanks to their AI not being active far away from the player, and then walk through the level unopposed. The "game" was ruined, but it was the most efficient way to get the objective of getting through and killing enemies, so players did it anyway.
Poor monetization strategies can fall into the exact same trap. And one example is Diablo 3's auction house. Diablo 3, much like its 2 predecessors, derives much of its "fun" from finding new items for the player's character to equip. Finely honed (perhaps too much for some players) through more than a decade of such games Diablo 3's loot system is a well crafted machine of getting players new items that they're excited to find.
But the auction house breaks this. By selling items directly you are selling the "reward" that the players go through the "work" of killing enemies for. In its own way this is the flip of the above Resistance 2 example. There the "reward" was to get to the end of the level, and the fun "work" was to combat enemies while doing so. Here the reward is new items to find, and the work is to combat enemies to do so.
But now the reward is gone. Players who buy the items already have their rewards of rare items, meaning there's less fun to be had with the game because the carrot at the end of the stick is gone. But they buy anyway, because if they have the money its the most efficient way to get that carrot. And doing something in a purposefully inefficient way isn't much fun for most people.
So when considering monetization it's important to design such that you are providing players with more and newer ways to have fun; and not to get them to pay to just skip over what's supposed to be "fun" about your game to begin with. That sort of thing smacks of people paying others to play Farmville for them, and we can all watch how that sort of design has helped Zynga.