Copper is a good conductor, not a perfect one. Every foot of wire has some resistance, and current flowing through resistance loses a small amount of voltage along the way. Over ten feet nobody notices. Over a hundred and fifty feet to a detached workshop, the equipment at the far end notices a great deal.
The effect is proportional to both the length of the run and the current being drawn. A lightly loaded circuit to a distant shed will measure close to full voltage with nothing running. Start a table saw on the same circuit and the voltage at the outlet sags while the motor draws its starting current, which is why lights dim at the moment a large motor kicks in.
Equipment reacts to this in different ways. Incandescent lamps simply run dimmer and last longer. Electronics with switching power supplies usually cope until the voltage falls far enough that they reset. Motors are the ones that suffer, because a motor starved of voltage draws more current to produce the same torque, and the extra current turns into heat in the windings. Over time that shortens the motor’s life considerably.
The recommended limits that appear in code documents are a maximum of three percent drop on a branch circuit and five percent overall including the feeder. These appear as informational notes on efficiency rather than as hard rules for most installations, but they represent the point beyond which equipment starts behaving badly.
The fix is almost always larger conductors. Increasing from twelve-gauge to ten, or from ten to eight, reduces resistance and brings the drop back within range. Occasionally the better answer is to run the feed at 240 volts and step down at the far end, because doubling the voltage halves the current for the same load and cuts the drop proportionally.
None of this is visible from the panel. The circuit is protected correctly, the breaker never trips, and the only symptoms are equipment that runs warm, tools that feel underpowered and lights that flicker on startup.
Anyone planning a run to an outbuilding is better off calculating this before trenching rather than after. The difference in conductor cost between the correct size and the one that only just fits the breaker is modest, and it is nothing compared to the cost of opening the same trench a second time.
Further reading: http://wiki.die-karte-bitte.de/