It's incredibly rare actually to find someone who has the sense to get this just right. I think it's very undervalued.
When you're a manager, the most awesome thing you can have is an employee you can trust. That means no unpleasant surprises. If you give them a task, it will be done on time, or you will be notified with enough notice to take action. You won't find out that they're slipping when it's too late to do anything about it. You won't have them claim to be done and then upon inspection find out that they've done it all wrong. You can just assign the task off and then you don't have to worry about it any more. You don't have to follow up and keep pinging them for status updates.
Someone with a great deal of sense will just know to give you status updates at the appropriate intervals. Not too often that they waste your time, but not too infrequently - they should always come in just before you start wondering "WTF happened to this task?".
One of the most crucial things is knowing what decisions they need to get approval for. It sucks to have an employee who asks about every little thing. "should I put this button here or here? should I make another file for this code or put it in this file?" Just make a fucking decision yourself, I don't care! But it also sucks to have someone go off and do all kinds of crazy shit without asking, like "oh yeah I ripped out the old animation system and am doing a new one" ; uh, you did what? and you didn't ask me first? WTF. Both are very common.
Of course the definition of the "right amount of approval" depends on the manager, and a key part of having good "sense" is actually social adaptation - it's about adapting to your situation and learning what is wanted of you. Many of the type-A left-brain coders never get this; part of your job as an employee is always interacting with other human beings, even if it's only with your boss, and there is no rational absolute answer about the right way to communicate, you have to feel it out and adapt.
Of course part of the role of a good manager is to teach these things, and to help people who may have good skills but not much "sense".
It's actually more annoying in personal life than in business life. For example you're having a dinner party and somebody volunteers to bring the wine, and then they show up with none, or they show up with a box of ripple. WTF dude, I could have just gotten it myself, if you're going to drop the ball, you need to notify someone with sufficient warning.
The annoying thing about the non-business world is you can't check up on them; like "hey can you give me a status update on that wine purchasing?" because you would be considered a huge dick.
A lot of this goes along with what I call "basic professionalism". Like if I assign you a crucial task that I need done today, don't go home without checking in with me and telling me it's done or not. If you think I assigned you too much and you can't get it done in time, don't go pout, come and tell me about it.
Another aspect of "basic professionalism" is knowing when to shut up. Like if you think the company is going in the wrong direction - raise the issue to your managers, that's good, if you have a good boss they want that feedback. But after they call a meeting and everyone disagrees with you and the decision is made to go on the path you don't like - it's time to shut up about it. We don't want to hear complaints every day.
A related aspect is knowing who it's appropriate to say things to. When we have someone from the publisher touring the studio, that is not the time to point out that you don't like the design of the lead character.
"Basic professionalism" is sort of a level below having good "sense" but it's also actually surprisingly hard to find.
One of the worst situations is to have someone who is not great about "sense" or "basic professionalism" but is touchy about it. Most people are not perfect on these points, and that's okay, but if you're not then you need a certain amount of supervision. That's just the way work gets done, but some people act like it's a personal affront to be monitored.
Like they occasionally drop the ball on tasks, you decide, okay I just have to ask for daily status reports. Then they get all pissy about it, "don't you trust me" or it's "too much beaurocracy" blah blah.
Or if they don't come to you and ask questions at the appropriate time, then you have to pre-screen all their approaches. Like sometimes you assign them a task and they'll just go off and start doing it wrong without saying anything. Now what you have to do is when you assign a task you have to say "can you tell me how you're going to approach this?" to make sure they don't say something nutso.