When I first got into dogs, I worked for a trainer who is a huge proponent of "letting them work it out" in nearly every situation. I was never fully comfortable with a lot of what went on there, and have come to be disgusted by some of the things I let go on (under orders). I know of one dog that died from it, and another who has had multiple surgeries and is still not sound. Countless punctures and tears.
I do think there are some situations where it is fine and can help; with a few dogs that I know very well, and whose owners I know well, I'll let a bit more go on with Meg than I normally do. These are dogs she is going to see on a regular basis and to an extent, they need sort it out and be done. I'm not talking fights at all - but a bit of snark or correction. Dogs who I know will not take it too far, and who I know I can reach in and grab without risking myself if needed.
Any dog Meg doesn't need to interact with (neighborhood dogs/agility dogs/dogs we see out walking/etc) - I don't let even that happen. There is no need for them to "work it out" when just not letting them be together is a valid choice.