The simple answer is: when they are used in low risk designs and done well, there may not necessarily be anything wrong. Of course, these are not the cases that receive publicity.
There are a number of different cladding systems being used which produce a (visually) similar result. This effect produces an unbroken, or smooth appearance which is labelled "monolithic", and used to cover various types of cladding. The main types are Solid Plaster (stucco), Texture Coated Fibre Cement sheets and Exterior Insulation and Finish System known as EIFS (plaster applied over a polystyrene base sheet). However, it is not just the cladding itself which is relevant to understanding the performance of the monolithic claddings. Most so called "leaky homes" with monolithic claddings have multiple defects.
Stucco: This is the oldest "monolithic" cladding system and is usually about 20 to 25 mm of various mixes of mainly sand/cement plaster, reinforced with some form of coated steel mesh. It was installed over either a rigid backing board (timber boards, concrete or fibre cement sheets, plywood, fibreboard or polystyrene sheets) or simply directly over building paper. Up until 9/2/2004 it was not mandatory to separate the stucco from the structural framing with a “cavity”. The change to requiring a cavity was made in response to widespread failures in direct fixed installations. Unfortunately, not all the early cavities were properly constructed, so having one is no guarantee that the cladding is weathertight. Both before and after 2004, some early “cavity” systems did not include all the features which are now understood to be essential. In particular, it was quite common for the early cavity battens to be no more than spacers, with the “cavities” between battens having no drainage or ventilation.
Texture coated fibre cement sheet: There are a number of cladding systems that involve fixing fibre-cement base sheets (usually 1.2 meters by 2.4 meters) over the framing. The finish required flush-stopping the joints between the base sheets and then applying textured coating and/or a waterproofing paint. Around 2003, it started to become common to install this system over cavity battens and as with the stucco described above, cavity installation behind fibrecement sheet was not always installed properly in the early years.
Modified plaster over polystyrene (EIFS): The house framing is covered in sheets of polystyrene (the thickness varies according to the desired level of insulation but is typically 40 mm). A form of reinforced modified plaster coating is then applied over the polystyrene, the plaster may be as thin as 3 mm, and is generally applied in several coats..
Further to the above broad categories, there are various sub-groups and variations depending on the substrate, for example plaster over brickwork or plaster over blockwork and various manufacturers offered specific modified plaster coatings for these substrates.
To the unskilled eye from the outside there may initially be little or no difference between any of these. The smooth, unbroken finish on the walls is what is most obvious