Magic is power. It is literally raw, unbridled power, the kind that gods harness to create worlds. Toying with the forces of magic is fiddling with the stuff of creation. Or at least, that's the way I like to play it. While a man with a sword can get a lot of things done, sometimes it comes down to the scholarly wizard to save the day, and that's what they're good at: reversing bad situations.
At first level, wizards have their one spell that they carry around with them. I know there are many people who have said it hardly seems fair that a first level mage should burp out a single spell and then be devoid of magics for the rest of the day. Not very wizardly, is it? Beyond the fact that these are barely-out-the-tower apprentices, there is another argument to be made. That is that, given good spell selection, that one first level spell can reverse the fortunes of a party 180 degrees. About to be splattered to hell by forces you cannot combat? If your mage has a sleep spell memorized, maybe you aren't. Discovered lurking around the cellars of an evil monastery? Not if your mage has a phantasmal force to distract the crazed monks (or even to make you appear to be a patch of darkness).
Magic fundamentally alters the surroundings in a profound and powerful way. The well-heeled wizard can use his spells to literally turn a TPK into a stunning success. The sad fact is that not every spell works this way, and not every spell is as good at that as every other. Out of level one spells, for example, magic missile is perhaps the most misleading. I don't know any first timer who hasn't wanted to select it and memorize it as their spell of the day. After all, it sounds badass and it makes an unerring ball of light that cannot miss and definitely strikes its target to deal damage. But magic missile is really a spell for mid- to high-level wizards to waste their low-level spell slots on. 1d4+1 points of automatic damage is somewhat flaccid even for a wizard (after all, his staff deals more damage!)
5d4+5 unavoidable, non-savable damage is something great. But what you really want to do as a low level mage is memorize spells that pack more oomph for their slots: sleep, color spray, etc. These are the mainstays of low level mages because they can make an 8 orc encounter into a 2 orc encounter very easily.
So it stands to reason that the ability to use spells cleverly, to understand your spell repertoire, and to make good judgement calls about the right tool for the job are integral to wizard play. Maybe less so if your party is cautious, particularly at low levels, as you will get a chance to really understand the depth of your mistake when you waste that first magic missile fighting 3 orcs and discover that it didn't contribute as significantly to the fight as you had hoped. If your party likes to push boundaries (like the Hounds, for example, who fought a 12 HD Bone Weird at the average party-level of 3) and get into risky situations then it becomes much more important for the wizard to know just what he's capable of.
Long range magic can be a life saver. Standing back and throwing off charm spells is another one of the encounter-revising effects, though now you have a charmed ally who you really need to dispose of before the spell wears off. Blindness can work to your advantage against all kinds of foes -- a single giant becomes much less of a threat if he's blind. Not to mention the classic damaging spells, lightning bolt and fireball but you can get nasty even at second or third level if you break out a chromatic sphere that lights clothing on fire -- 1d4 points of damage per round until the target puts themselves out or so is also nothing to sneeze at.
Where cleverness and creativity in deciding your battleground can severely cant things one way or the other, cleverness and creativity in spellcasting can literally completely turn a situation around. This is one of the reasons that I generally ward new players from being wizards: it's a difficult class to fill, and the more familiar one becomes with their capabilities the better at it one manages to be. I've always found its better for new folks to watch a seasoned hand play a mage (or at least, if they really want to be one, to get that seasoned hand's assistance in spell selection and such).
The same goes, unfortunately, for foes. A well-cast sleep spell can mean the end of an entire party. Hold person is equally as brutal. One should always look out for wizards and make an effort to kill or incapacitate them early on in a fight. That leads to the most important tactic for PC mages: stand somewhere where enemies won't come up to you, make sure you're out of the way of missiles, and for the Gods' sake don't wade into the frontline unless you have some kind of powerful magic up your sleeve.