Tarun Chitra provided an excellent description of when governance is needed within DAOs in his recent piece for a16z,

Because of the limited token model on which they operate, DAOs are forced to rely on implicit and interpersonal mechanics. Human intervention is necessary because there is not enough trusted information captured on-chain about an individual in a DAO.

“Instead of a hierarchical structure managed by a set of humans interacting in person and controlling property via the legal system, a decentralized organization involves a set of humans interacting with each other according to a protocol specified in code, and enforced on the blockchain,” Buterin wrote in 2014.