The gist of it is this:
Some champions are very oppressive to play against IF they are ahead. With yi and a number of other champions, if you lack the damage to kill them because they are ahead, it is very hard to disengage whereas they have the damage to kill you and the ability to both get to you and stick on you afterwards. Meaning, if a Yi is ahead, you are not having fun in the game because there is a champion on the other team that can, if he sees you, make a B-line on you, catch you with high reliability, and kill you and you have no _effective _action to take against this because your mobility is insufficient your damage is insufficient your tankiness is insufficient and your CC is useless / evaded and this persists even if you have allies nearby. Altogether a Mr Yi being 1 item and 1 level ahead of you sucks the fun out of the game due to the sheer ability of the yi to just Beeline on you and kill you.
This is balanced around these champions having a hard time getting ahead due to low amount of early power and low amount of early dueling ability.
The gold funneling strat is a workaround that removes the necessity to contest the other players in order to "get ahead", for one player. If that player is playing an "oppressive when ahead" champion, than that player get to be in his oppressive state "for free".
From a game balance perspective this is not a problem because you can get advantages elsewhere on the map, and we see that in pro play gold funneling strats do not out do standard play, however it still leaves you to deal with a "fed" mr yi / karthus / jax / trynd / whatever which is a sucky experience.
+
jungle 
top and 
mid, 
and Conqueror is super scary to face. This is the reason people do the same with 