I'll try not to go on at too great length here, though I could, believe me. No wonder people think writing workshops are a waste of time when so many writing classes consist of the mindless repetition of the mantra "Show, don't tell."
OK, let's dispense with the obvious, namely, that there's a kernel of truth to the old saw. Fiction is a dramatic art, and you need to dramatize, not simply state things. You need to use the sound, feel, smell, taste of language to make a reader undergo an emotional experience. The sentence "John was a handsome man" is not a handsome sentence, and though a writer is welcome to use it, she shouldn't think it will do much work for her.
It doesn't follow from that, however, that all a writer should be doing is showing. A story is not a movie is not a TV show, and I can't tell you the number of student stories I read where I see a camera panning. Movies are a perfectly good art form, and they are better at doing some things than novels are. But novels are better at doing other things. Moving around in time, for instance, and conveying material that takes place in general as opposed to specific time (everything in a movie, by contrast, is in specific time, because all there is is scene--there's no room for summary, at least as we traditionally conceive of it). But more important, novels can describe internal psychological states, whereas movies can only suggest them through dialogue and gesture. To put it most succinctly, fiction can give us thought: it can tell. And where would Proust be if he couldn't tell? Or Woolf, or Fitzgerald? Or William Tevor or Alice Munro or Lorrie Moore?
And yet, day after day we hear Show, don't tell. And there's real fall-out. I see it constantly among my students, who are nothing if not adjective-happy. "The big brown torn vinyl couch." Do we need to know this? We are writing fiction, not constructing a Mad Lib. Yet writers have been told to describe, and so they do so, ad nauseum. It's like the sentence that's used in typing classes--"The quick brown fox jumped over the lazy dogs." Well, this is a good typing sentence (it contains every letter of the alphabet), but it's a bad fiction sentence.
If you ask me, the real reason people choose to show rather than tell is that it's so much easier to write "The big brown torn vinyl couch" than it is to describe internal emotional states without resorting to canned and sentimental language. In other words, "show, don't tell" provides cover for writers who don't want to do what's hardest (but most crucial) in fiction.
Besides, the distinction bestween showing and telling breaks down in the end. "She was nervous" is, I suppose, telling, while "She bit her fingernail" is, I suppose, showing. But is there any meaningful distinction between the two? Neither of them is a particularly good sentence, though if I had to choose, I'd probably go with "She was nervous," since "She bit her fingernail" is such a generic gesture of anxiety it seems lazy on the writer's part--insufficiently well imagined.