Where, in everyone's opinion, is the fine line between a game being genuinely challenging, versus a game being downright bullshit-sadistic-and-unfair? Does such a line even exist?

I like games where the difficulty lies in figuring out what to do. It you've figured out exactly what you need to do, but have difficulty doing it because it requires ungodly amounts of luck/precision, that's when it becomes sadistic.

Such a line, if any, would vary from person to person. If you're looking for an objective standard, I don't think there is one.

As wpegg said, for me it would probably come down to the controls. I rather enjoy difficult games, even controller-tossingly frustrating ones, but I'd rather the challenge be in the game itself rather than in overcoming a poor control scheme.

Even then, I'm pretty forgiving of control schemes. They don't have to be perfect, but they should allow me to do what I need to do to face the challenge.

At times I found Dark Souls a bit unfair, especially the boss battles and some of the cheap shots just to kill you. However I endured, learnt from mistakes and did a bit of grinding to level up, finally managed to finish it a year after I bought it. I did enjoy it though, kept me hooked and interested right through.

I don't like it though when you get high difficulty spikes. Quite a few RTS games can do this and I have also found some shooters. Few nights ago was playing Ghost Recon Future Soldier, I am quite far into it, few levels after the oil rig, worked my way through doing sync shots and just before the helicopter and extraction you get swamped by enemies from all angles so cover has limited options. It was really frustrating and took a while to get through it. Still enjoy the game regardless, but found it a bit OTT

I would offer an answer less descriptive: "As easy or as difficult as possible without taking from the fun in the game, and then a mode harder than that, and a mode easier"

On a general level: if I feel in a hard game that each retry gets me closer to my objectives, I consider it challenging. If not, I consider it irritating and unfair.

More specific for some genres:

Give me my save-anywhere (e.g. Far Cry, it has it unofficially; or the reason I so much prefer PC Tomb Raider to the Playstation version) and no useless time limits on all missions (I'm looking at you, Rise of Nations!). And for RTS games, please don't use the game speed as an element of challenge (FU, Warcraft 3 and Starcraft 2). RTS games are NOT supposed to be a test about how fast you can click and scroll the screen around.

As long as I can enable/disable those at will, I think I'm open to any kind of challenge. For instance, I hope I could just switch off the 90 minute mission time limits in Rise of Nations, but otherwise keep the difficulty level intact. It is challenging enough without that time limit which makes no sense.

A line definitly exist with regard to controls. The H&D series is sadisitic for everyone because evidently they let a crosseyed monkey set up the keyboard arrangment.

In other regards it may just be the player. I love RTS games and I always thought I was halfway good at them, but I get my ass kicked all over the place whenever I try to play Dark Reign. I thought it was an impossible game, but it turns out for one reason or another I just suck at it.

Ultimatley I just want to be able to adjust difficulty so when I'm new at it I can have fun and learn to play it without being thrown into the fire. Later, when I'm better, I can turn it up and build form there.

There isn't one specific line, especially when you consider other factors outside the difficulty itself.

The main one being frustration, which I believe is directly connected to how long you need to wait before trying again, and just generally to how much of our time is being wasted between tries.

Two personal examples would be New Super Mario Bros. Wii and Rayman Legends.

Mario is a much easier game but due to dying 5 or so times during a boss because of some stupid mistake, going through the death animation, being kicked back to the map screen and having to replay the entire second part of the level just to get to the boss again became very frustrating, add to that the growing need to go back and farm lives just made me give up on the game.

Rayman does away with the concept of lives and the levels are divided into rooms, whenever you die you restart in that very room with no need to replay something you've already beaten, plus it takes less than five seconds to load your next try. Yes, I died dozens of times during the later levels, but the part I died at was right there, so it put me in this mindset of "just one more try", that way despite being a much harder game than Mario it was never frustrating and I played it to completion.

It's pretty simple..

The older you get, the harder the games become.

Well said! I feel the same way.

I like games with a fair challange that you fell good about getting far into the game. A Lot of new games seem to have a very easy (normal) mode or gives you hints for everything.

Depends on the genre for me.

Stealth games I always play on hardest, because I strive to never be seen anyway. Playing Dishonored for the first time right now and chose the hardest difficulty out of 4... it's still pretty easy, honestly. I am good at stealth games because I am extremely patient.

Shooters I am pretty good at, but the hardest levels are often frustrating. Also many games are balanced for some measure of auto-aim on consoles, so the faster mouse aiming doesn't really give one the advantage you might think it does. So I play on normal most of the time, or the 3rd level if there are 4.

RPGs rarely have difficulty levels but when they do, like Skyrim, I play on normal. I am mostly playing RPGs for exploration and story, not combat. One exception would be the Dragon Age games, which needs to be played on hard or so to offer the same tactical challenge of Bioware's older games.

Overall I do think games should provide a challenge but not be frustrating. It can be a fine line to walk sometimes. The AC controls just suck, difficulty level be damned.

Since no one has mentioned adventure games yet.

I hate when an adventure game puzzle feels too contrived. If I have to go to a walkthrough and I feel like an idiot for not getting it myself, it's a good puzzle. If the only way for me to get it by myself is to randomly trying combining every item with everything, it's a bad puzzle.

Very good point. I have my standard example I use for this as Monkey Island 4, where you had to use the banana picker with the nose of the giant monkey statue. There were no hints, it was very annoying.