Mr. Robbins points out that the tyrannical DM is actually shouldering a large chunk of work, and can be described as taking one for the team:
But with the tyrannical GM, you have one person who steps up and says “this is my game, it is my creation, I’m in absolute control and make everything happen. I resolve all disputes and I make sure all players are entertained.” Which means you, the player, are completely off the hook. You can be as selfish as you want, or as rude as you want, or as lazy as you want, because the GM has taken responsibility for making the game work and taking care of everyone at the table.
I think that's a tad extreme, but not entirely off the mark. However, I also think there's a marked difference between what is accepted tyranny in old school play and new school play, and that this leads to some, if not most, of the friction between us RPGers.
Old school tyranny is best summed up in the phrase "rulings, not rules". The old school DM has the final say on what can and can't happen. Can Rukmini sew a bag from scavenged sail cloth to keep the enchanted jade eggs safe in? Old school versions of D&D don't have skill systems, so it's entirely up to the DM to decide. However, this is great freedom for the players. They don't have to worry about what the rules do and don't cover. If they want to try to disguise themselves, or kick sand in the face of an enemy, or distract the guards with a Punch & Judy show, they can just dive in and do it, letting the DM worry about how such things intersect with the rules.
New school tyranny is a different sort. Ok, first off, let me say I don't have a copy of Keep on the Shadowfells handy, so I'm working off memory here. If I'm wrong about something, someone please tell me so I can eat crow, but...
The new school tyranny is the tyranny of plot. The DM has a plot, a story, that they expect the players to play through, just like in a computer game. Minor deviations might be permissible, but if you go off the reservation, you risk derailing the entire evening's gaming, because the DM isn't prepared for it. Take a look at Keep on the Shadowfells. There's some wiggle-room in the order in which events take place, but not a lot. First this ambush, and then that ambush, and then into the tunnels...
The players, for their part, don't need to look for action. It's up to the DM to point them towards the next way-station in the plot. They show up, interact with whatever the situation is, and then move on to the next. It's pretty low-impact, and if you're digging what the DM has planned, it's pretty much guaranteed entertainment.
Now, compare this to Keep on the Borderlands. The first thing some folks notice about KotB is that the people in the keep are described with stats and treasure. Yep, that's right, if the PCs decide to, they can kill everyone in the keep and take their stuff. Some, of course, scoff at this, saying it plays right into the fight-and-loot myopia of old school gaming. But, in truth, it opens up all sorts of possibilities for play. Yes, the PCs can fight the monsters in the Caves of Chaos and use the keep as their base. But they can also decide to become burglars, breaking into the homes of the keep's denizens and stealing their loot. Or they join the evil cult and lead an army of monsters against the keep. Or they can play the monsters and the keep off against each other, Yojimbo-style.
But what if the players want to try something like that in 4e's Keep on the Shadowfell? The poor DM is all on his own. The adventure as published assumes the players will fight the cultists and their monster minions on behalf of the town of Winterhaven. If you want to loot and pillage the town instead, you've gone off the rails. The DM has to come up with stats and treasures without much help from the game at all. I suppose you could use the Human Rabble and Guard monsters from the Monster Manual to flush things out, and then (speaking of tyranny) use the 4e treasure system to dictate what the players can loot. But I wouldn't call that optimal.