This mechanic nullifies ballistic/gravity trajectories that allow spells/skills to be dodged by moving away. Usually this property is reserved for single-target skills, but some games allow wide variety of skills to be enchanced by target-seeking.
Balance issues:
1.Spells/Skills become undodgeable: It removes tactical movement from the game in PvP and simplifies PvE targeting to ignore monster movement.
2.Target Seeking combined with ranged attacks is overpowered: characters can attack off-screen monsters with 100% precision and zero retalitation(as monsters rarely have enough range to find player).
3.Gameplay with autoattack is very simplified(very close to having your own bot): just turning on autoattack and it will target/kill nearby monsters(which respawn).