(--fixup type commits aside).
Practical benefits from not squashing history:
- Can bisect to find bug introduction.
- Can annotate/praise/blame to find who/when some change was made.
- Adam Tornhill's "Code as a Crime Scene" argues that it'd be beneficial to consume VCS history to provide health metrics on the codebase. (e.g. use VCS to check which sources have many contributors (thus potentially high defects), or check for "lost knowledge" from developers who have left).
- Can build/run an older version of the software.
But is there really a big advantage from putting time into maintaining a sequence of commits? EDIT: Ah, I see another comment point out that "maintaining a nice history" tends to mean fixing very borked commits. That makes sense. :-)
The fact that I had a bunch of stupid typos and broken tests that I didn't realize were broken before I committed doesn't need to be in the final history. What I really want for the preserved history is the conceptual chunks of changes I made along the way.
If you have a safe work atmosphere, and yor teammates reviewing the work can discover pitfalls in your project's workflow, you as a team can have discussions about it can improve your test stuff. And you can maybe go back through the history and see how many times this kind of normal human mistake with other branches and developers.
You can still diff through the PR as a unit before merging, without getting bogged down in low level commits.
Code and by extension history should be easy for humans to read. For that reason, the signal is very much worth keeping and polishing, but the noise is not. Documentation of false starts, appealing but ultimately problematic design choices, and “why” information belong in comments, commit messages, or design documents — explicit rather than implicitly littered around the history.
But maybe you use your history for something else that I haven't considered.