For air cooled engines in particular, some of the engine cooling is provided by the fuel. Running too lean will increase the chamber temperature and can possible bring on detonation and severe engine damage. The extreme end of this is a hole melted in the piston top.
This increase in chamber temp also means a hotter piston and more stress on the oil reaching the rings, so a breakdown in lube ocurs and an increase in oil cokeing/carbon formation which increases cylinder wear.
On the other hand too much fuel will weep past the cylinder walls and breakdown the lube oil. But an excessively rich mix usually shows up as black smoke in the exhaust and carbon buildup on the pipe.
IMO, it is best to set the mixture screw slightly on the rich side of best run/peak HP...