Electrically a long lead will mean a higher voltage drop along the lead meaning the equipment will be supplied with a lower voltage when the quipment is taking current.
An un-necessarily long lead can create a trip hazard unless kept tidy when the equipment is being used.
That said an extension lead on a roll must be unrolled before use as otherwise the inside of the rolled up lead can get hot enough to melt the cable.
A long lead will also increase the impedance (resistance), a high earth fault loop impedance will mean that under fault conditions a MCB or fuse might not trip. Which is why it always a good idea with socket outlets to have short lead and to have the circuit protected by a RCD or have one of those plug in RCDs plugged into the tool/extension lead when using hand tools or extension leads, as RCDs will still work with a much higher earth fault loop impedance.
The earlier answers might be correct, but the main reason to keep the lead on power tools as short as possible is to avoid mechanical damage such as drilling into/cutting through the cable. In the days when so-called 'professional' power tools were fitted with at least 10 feet of cable, they were usually repaired at several points along the length with insulation tape. A long lead is also susceptable to damage when tangled up and put back in the toolbox after a job.
Extension leads often, but not always, come on a reel, hence are less likely to be damaged and less likely to be tangled. In any case, the impedance of a short lead plugged into an extension lead is likely to be somewhat greater than the impedance of a long lead, so what's the point you are trying to make?
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