Valve lash is one factor which determines how far the intake and exhaust valves will open into the cylinder. If the valve clearance is too large, part of the motion of the camshaft will be used up in removing excessive clearance, thus the valves will not be opened far enough. This condition has two effects, the valve train components will emit a tapping noise as they take up the excessive clearance, and the engine will perform poorly, due to a smaller amount of air/fuel mixture admitted to the cylinders. The less the exhaust valves open, the greater the back pressure in the cylinder.
If the valve clearance is too small, the intake and exhaust valves will not fully seat on the cylinder head when they close. When a valve seats on the cylinder head it does two things, sealing the combustion chamber so none of the gases in the cylinder can escape and cooling itself by transferring some of the heat it absorbed from the combustion process. Therefore, if the valve clearance is too small, the engine will run poorly (due to gases escaping from the combustion chamber), and the valves will overheat and warp.
While all valve adjustments must be as accurate as possible, it is better to have the valve adjustment slightly loose than slightly tight, as burnt valves may result from overly tight adjustments.