Why are functions in OCaml/F# not recursive by default?

One crucial reason for the explicit use of rec is to do with Hindley-Milner type inference, which underlies all staticly typed functional programming languages (albeit changed and extended in various ways).

If you have a definition let f x = x, you'd expect it to have type 'a -> 'a and to be applicable on different 'a types at different points. But equally, if you write let g x = (x + 1) + ..., you'd expect x to be treated as an int in the rest of the body of g.

The way that Hindley-Milner inference deals with this distinction is through an explicit generalisation step. At certain points when processing your program, the type system stops and says "ok, the types of these definitions will be generalised at this point, so that when someone uses them, any free type variables in their type will be freshly instantiated, and thus won't interfere with any other uses of this definition."

It turns out that the sensible place to do this generalisation is after checking a mutually recursive set of functions. Any earlier, and you'll generalise too much, leading to situations where types could actually collide. Any later, and you'll generalise too little, making definitions that can't be used with multiple type instantiations.

So, given that the type checker needs to know about which sets of definitions are mutually recursive, what can it do? One possibility is to simply do a dependency analysis on all the definitions in a scope, and reorder them into the smallest possible groups. Haskell actually does this, but in languages like F# (and OCaml and SML) which have unrestricted side-effects, this is a bad idea because it might reorder the side-effects too. So instead it asks the user to explicitly mark which definitions are mutually recursive, and thus by extension where generalisation should occur.

There are two key reasons this is a good idea:

First, if you enable recursive definitions then you can't refer to a previous binding of a value of the same name. This is often a useful idiom when you are doing something like extending an existing module.

Second, recursive values, and especially sets of mutually recursive values, are much harder to reason about then are definitions that proceed in order, each new definition building on top of what has been already defined. It is nice when reading such code to have the guarantee that, except for definitions explicitly marked as recursive, new definitions can only refer to previous definitions.

The French and British descendants of the original ML made different choices and their choices have been inherited through the decades to the modern variants. So this is just legacy but it does affect idioms in these languages.

Functions are not recursive by default in the French CAML family of languages (including OCaml). This choice makes it easy to supercede function (and variable) definitions using let in those languages because you can refer to the previous definition inside the body of a new definition. F# inherited this syntax from OCaml.

For example, superceding the function p when computing the Shannon entropy of a sequence in OCaml:

let shannon fold p =
  let p x = p x *. log(p x) /. log 2.0 in
  let p t x = t +. p x in
  -. fold p 0.0

Note how the argument p to the higher-order shannon function is superceded by another p in the first line of the body and then another p in the second line of the body.

Conversely, the British SML branch of the ML family of languages took the other choice and SML's fun-bound functions are recursive by default. When most function definitions do not need access to previous bindings of their function name, this results in simpler code. However, superceded functions are made to use different names (f1, f2 etc.) which pollutes the scope and makes it possible to accidentally invoke the wrong "version" of a function. And there is now a discrepancy between implicitly-recursive fun-bound functions and non-recursive val-bound functions.

Haskell makes it possible to infer the dependencies between definitions by restricting them to be pure. This makes toy samples look simpler but comes at a grave cost elsewhere.

Note that the answers given by Ganesh and Eddie are red herrings. They explained why groups of functions cannot be placed inside a giant let rec ... and ... because it affects when type variables get generalized. This has nothing to do with rec being default in SML but not OCaml.