As Still Learning and others said, it's all about control and about pre-agreed levels of intensity and contact so there is a consensus/understanding at what level the sparring session is at.
It sounds strange as a sifu/master should have the control himself even if pressed by skilled students and also, just as confusing, the senior students should also have enough experience and control themselves to avoid the teacher, or more likely themselves, getting hurt via excessive contact.
Accidents always will happen, but with control a lot of serious damage can be avoided.
I spent about two years training in WC alongside my karate to get some of its great ideas. Appreciate this is of course v. junior and not much time but due to my years of training in karate and other arts I used to spar after class and separately in the weekends with the sifu's most senior black shirt student. It would be quite freestyle as at times we would agree I would use karate and TKD, ie kicks at all heights. Other times we would use purely WC to spar in semi contact (I generally got served!). I thought this was beneficial to us both because when we started he was not at all excperienced in dealing with high kicks. Then the sifu put an end to this, I never really understood why (on reflection I probably do now), I tried to press him but he got quite angry. It took my heart out of the club as in the classes there was no unrestrcited sparring. I soon dropped it and focused on just karate and jujitsu again. This is no bag at all against WC, this is just an experience about how frustrating it can be for some students when they don't have an open(ish) forum to try their skills on peers and more advanced practitioners.
I have always found that sparring against your sensei is the best way to find (and eliminate) your sloppy aspects/weaknesses and what could be better for preparing you for competition or real life?