Azuriel feels that Blizzard has unstated reasons behind cutting flight:
So here’s my theory: Blizzard is removing flying to cut future production costs.
In a world without flying, or restricting flying to specific areas, Blizzard is free to replace large swaths of the map with 2D sprites and skyboxes. This is the exact reason why you still cannot fly in Silvermoon City: the city outside the narrow roads simply doesn’t exist. Stormwind had the same issue prior to Cataclysm, if you’ll recall, but they did spend the manpower to construct a fully 3D space. They had to, because otherwise every character with a flying mount would immediately see the seams of the gameworld.
I think resorting to conspiracy theories is excessive. Let's just take Blizzard at face value, and accept that they don't like the way flying changes the game.
It's not like this attitude towards flight comes out of the blue. In TBC, the very expansion which gave us flying, we also got Sunwell Isle. Sunwell Isle was a max-level open world questing area where flight was prohibited. Raids and instanced content have never permitted flight. Some of them, like Firelands, were large enough and open enough to allow it.
PvP zones have never allowed flight. If the PvE gameplay issues with flight aren't bad, why are the PvP ones so much worse?
So from the very beginning, max-level content has not really coexisted with flight. Occasionally it's allowed, but very often it's prohibited.
However, I really liked this article from Matthew Rossi at Blizzardwatch. He argues that Blizzard "is absolutely right — flying detracts from gameplay in a host of ways. But taking it away from the player base is worse."
Flying is such a great reward, precisely because it is so powerful, that players love it. The sense of freedom, of being unbound from the 2-D world is very potent. For that reason alone, it should be kept as a reward for reaching max-level, and we should just live with gameplay issues.
I think this point of view makes a great deal of sense. That the sheer reward of flying outweighs the gameplay issues it brings.
Blizzard should bring back flying for max-level content, but try to make it a bit less convenient, while keeping as much of the feeling of reward as possible. In particular, I would single out the ability to hover as what causes the most gameplay issues with flight. I wonder if simply having flying mounts always be moving forward would be enough to keep them in check.