1- Provide a fun game for the players.
2- Ensure that the PCs survive unless they do something unbelievably stupid (something on the level of taking a piss on Lofwyr's claw)
3- Provide an appropriate level of challenge (severe depletion of resources and severe injury of a PC--as in very near death--is a sign of an encounter that is either too much or needs an extra experience reward)
4- Have fun yourself. (While you should be enjoying the game as well, the players' enjoyment should be priority over your own.)
1 and 4 are the only one of those I agree with. But I'm a brutal GM. I make sure the PCs have a means of understanding the challenges ahead, and then leave how to tackle them in their hands... as well as whether or not to tackle it at all. After that, its on them. If they die, they die. I actually consider severe depletion of resources and severe injury of PCs to be a good sign most of the time, unless its unexpected by everyone. That means the challenge was real, it was difficult, and the PCs won on their own merits--I handed them nothing. The other trick I use is that I make the major antagonists not give a rat's ass about murdering the PCs, with few exceptions. Usually, I plan for a "bad end," where the PCs fail everything. I plan for a "good end," where the PCs accomplish most of their goals. And I often plan for a "best end," which includes feelgood sidequests.
Hrm. An example. Last month I was running a Changeling Game. In it, they were trying to rescue some children stolen by goblins. Throughout the story, I kept foreshadowing that the Big Bad Wolf was going to be let loose. I worfed my current antagonists and made sure the PCs understood the basics of the Wolf's trick--that he can just murder people who aren't being watched. The PCs decided they could control line of sight and free the girl anyways. Of course this was messed with, and for a split second one of the PCs wasn't being paid attention to--they almost died. The PCs took the girl and
ran. They escaped, saved the kids (good end), but the Wolf followed them into the mortal world (not the best end). Fun was had by all.
Re: FudgingI proffer to build trust with my players. Most of my rolls are in the open. I've even found ways to not have to fudge perception rolls
per say. I find that building this sense of trust helps me when I want my NPCs to not play by the rules. The PCs are confident that my NPCs are playing by
a set of rules, even if they don't understand what they are yet. On top of that, it helps the players feel like
they are what accomplished things.