My opinion is that staff/player interaction is best in small doses. I actually interact with players personally quite a bit, but I do it sparingly. Why? Because in my opinion players(at least the sort of players that don't browse forums and interact with staff outside of the game) really appreciate and get a kick out of meeting an admin. When I need to work on fixing a bug or glitch typically I will test it out with players, and they really do enjoy it.

But... that charm goes away quick when it becomes a daily and casual thing. For one, staff shouldn't be doing it to get attention. I do it because I feel it brightens the players day, and in fact most people don't even know who I am or what I do. As far as players know I just tell them "I just do things." But if staff walked around all day visible, giving players hugs and casually talking... then it becomes the norm. Players no longer appreciate that random staff interaction, they expect it, and that's bad.

Also, interacting with players isn't always that fun. More than half the players are assholes and make me instantly regret unhiding. Many want bragging rights by killing an admin, and others just want to annoy/pester them. Too many players are just... annoying.

At least, that's how I approach interacting with players.