Cheers erupted from the table.
"For the Mountain Dew!"
The Dungeon Master however, was not impressed. Sifting through his stack of papers he found the photocopies of our character sheets and made some quick references. "Wait a second. How did you beat the dragon's grapple checks? That's impossible with your modifier!"
We all looked to the victorious warrior who leaned back, a slick grin on his victorious face.
"Remember the minor Shadow Ring artifact we found in the Citadel of Midnight? You said it had the ability to change into any one magical ring. Well, I changed it into a Ring of Freedom of Movement before the battle. Pretty smart huh? See, I wrote it on my sheet!"
"Smart?" Wisps of steam rose from the pink-faced Dungeon Master's ears. "You didn't tell me you had Freedom of Movement cast! You just said you beat his grapple checks!"
"Well, the dragon wouldn't have known about the ring or it's effects on me. I knew if it couldn't grapple me the first time it would get frustrated and - not being able to take defeat well - would keep trying and waste all of it's rounds."
"I can deal with what the dragon knows. As the Dungeon Master though, I need to know what your character has for abilities and items! That's why I made copies of your sheets! How can I run a fun and challenging game for you all without knowing what will actually challenge your characters?"
"If you run your challenges based on what we can do, then what benefit is there for getting more powerful and coming up with unique strategies? You'll have an answer for every attack!"
*Cue fight music*
Secrets at the table. Good idea? Bad idea?
You Can Never Know Everything
Any good DM knows that even if they know the ins and outs of their player's character sheets, they could never know everything about a character. Some players assume that when a DM has a copy of their sheet, they lose all chances to do something which surprises the DM, but they must realize that a DM can never account for imagination and creativity.
Players, you still hold the power! So, if your DM wants copies of your sheets, try not to worry TOO much.
DMs, please remember that you can't control what the players do. Just because you have their stats doesn't mean you know everything they're going to throw at you. Even if you think you can predict your player's movements to a T, don't rely on it, lest your carefully planned campaign de-rails a little and you find yourself uttering those words no DM should ever utter.
How Much Fun Is "Challenging"?
Challenging is an interesting word. I don't think anyone, player or DM would say that they wanted a simple, non-challenging campaign. An easy campaign is just no fun. Sure, having the occasional encounter where the heroes simply stomp the enemies can be fun, but overall a campaign should be challenging.
But how do you make a campaign or encounter challenging?
Is it simply by sending boatloads of monsters at your PCs, or launching something several levels higher than them onto the grid?
One of the best ways to make an encounter challenging is to tailor a monster specifically to battle the group. If the group is seriously lacking in aerial attack power, throw something with wings at them. Take down your party's pyromancer with a monster immune to fire! Yes, this is challenging... but is it fun?
One of the big reasons DMs may keep careful tabs on their players is to tailor encounters to be "challenging" for them, but TREAD SOFTLY DMs! If you take away all of their favorite toys, your players may close down and stop having fun. As soon as a player feels "useless" in a battle, you've hit a major problem.
Tip: If you want to keep a challenging battle fun, rather than make your character's abilities useless, force them to come up with new and creative ways to use their abilities. Puzzle bosses are a great example of how you might incorporate this idea.
An Unfortunate Reality
One benefit of transparency is that it takes a big stab at cheating. Players can't change their skill points, or their prepared spells, or their eye-color mid-campaign. The other edge of this sword is that a call for transparency unfortunately does imply at least in some small way that a DM wants to keep tabs on their players.
Is that so bad?
Well, it can put pressure on the DM/Player relationship, even though it does help to keep everyone at the table honest.
Obviously this aspect of transparency at the table should be addressed in an individual group-to-group manner. Only you know what will work best for your group, and how trustworthy your players are to not fudge their sheets. In an ideal world, no D&D player would ever cheat, and in many groups it never happens.
Every so often though, there are players who make an attentive DM raise their eyebrows. I've sadly seen this more often than I'd like in my time as a DM.
The question of whether or not players should be able to keep secrets from their DMs is one I've dealt with in many of my gaming groups and really should be solved on a case-by-case basis. What will work best for your group? What will maintain levels of fun and a healthy degree of challenge?
A DM's expectations of transparency should be laid out at the beginning of a campaign (don't hold your players to high expectations that you've never explained), and players should work with their DM rather than against them.
In the end, it's up to you! It's true that "secrets, secrets are no fun", but sometimes they're the best things ever.