I think that eventually, anything that can be run by a DAO will be run by a DAO, just like with automation, any process that can be automated will, eventually, be automated.
Even if "governance" is "decentralized," there are still going to need to be people in the DAO, day to day, doing the work that no one wants to do, making decisions that no one wants to make.
It seems to me like a DAO is just a college group project but if you add crypto it solves everything?
Organizational behavior and its challenges don't go away because you've issued tokens.
Honest question, what the heck am I missing? It has to be something!
In particular I'm thinking about some of the procedures aboard nuclear submarines where automated systems were tried and eventually rolled back, because the automation would be fine 99.9% of the time but when it failed it would cause disaster at computer speeds instead of just at human speeds. I can definitely imagine a bug in a DAO being completely unacceptable in some domains even if it is more efficient than doing the same job with humans. (For example, in national voting)
Finally even for those cases where automation is desired and could be done by some autonomous entity, I'm not sure why you would specifically need a Distributed AO instead of just regular cronjobs on a server somewhere. Any real-world system is going to need regular updates anyway, so you end up centralizing trust in whoever can update the code for the (D)AO.
Very few people want a robot deciding how they spend their time, energy, and assets. Resource allocation will be the last unautomated job on the planet if we make it to post-scarcity. People want everything done for them except deciding what those things that need to be done are.
*DAO doesn't need to run on Ethereum blockchain, it can also be a sufficiently autonomous collection of ERP systems.