I suspect rah is probably right but maybe i'll roll a map and give it try. The mechanic does seem a little schewed. Maybe they should've limited how much you can trade the same tech or be in a certain era before getting it from another civ just for game balance...just a thought
First, I quite disagree with previously expressed thoughts on tech trading. It's a default mechanic of the game and plays very well with diplomatic aspects. The option is pretty much about personal preference or making the game more challenging, if one chooses. I really don't find it relevant to the topic anyway.
As rah mentioned, tech trading on allows for many more aspects of the game to be realized, probably more than he may even realize himself. Also, I look at it this way. Tech trading off - AIs don't trade with human, but they don't trade with each other. Conversely, with it off AIs trade with human and other AIs. There's more balance to the mechanic than what opinions state - (although the balance decreases with decrease in difficulty). However, it opens up good strategies and gameplay tactics if one knows how to tech trade optimally. That includes knowing how to tech optimally.
As for limits, lump, AI leaders have trade caps - with the exception of Mansa - so depending on the leader (trade caps limits vary by leader) the human can hit a wall on being able to trade stuff as they will "fear you are becoming to advanced". Furthermore AIs tend to not trade certain techs like Wonder techs or certain military techs (think Construction) for quite some time, even if you have good relations. Also, there is an option called "No Tech Brokering" which prevents trading techs around that you acquired in trade previously - probably the happy medium to the issue.
IMO no tech trading is far too limiting with respect to other mechanics in the game. Not being able to acquire techs in peace deals or offer them to get out of a war is not logical. Or simply to trade older techs for gold..in other words - sell or barter your empire's knowledge. Certainly an historic basis for that transaction.
With that said, there is certainly merit in playing with it off if looking for more of a challenge. I find Deity plenty challenging anyway, but the option is there all the same. I think it far from a stupid mechanic in this game though.
Lastly, there are situations like iso/semi-iso that would be nigh impossible without it ..same goes for the AI.