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According to How Sink works in the ArcGIS Desktop 10.3 documentation:

Naturally occurring sinks in elevation data with a cell size of 10 meters or larger are rare (Mark 1988), except in glacial or karst areas, and generally can be considered errors. (source)

Lakes, ponds, valleys, volcanoes are all naturally occurring "sinks". In fact, any non-monotonic topography has "sinks".

So why are sinks in DEM considered an error?

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    Such a person has never mapped the Australian arid regions to make a statement like that.
    – Michael Stimson
    Commented Jul 20, 2017 at 2:59
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    I think the specific case is hydrology, where the modelling assumes rivers / streams. Possibly from early SRTM data where really rapid changes confused the results and produced voids in the data.
    – BradHards
    Commented Jul 20, 2017 at 3:11

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Esri has a good distilled explanation in their How Fill works documentation:

Sinks (and peaks) are often errors due to the resolution of the data or rounding of elevations to the nearest integer value.

Sinks should be filled to ensure proper delineation of basins and streams. If the sinks are not filled, a derived drainage network may be discontinuous.

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  • I understand that drainage calculation requires filling up sinks. The question is why they deem it as data errors in the first place.
    – Sparkler
    Commented Jul 20, 2017 at 5:05

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