In Panoramio you can move your photos dragging its red pin over the map. That is direct manipulation.
Imagine the old system: first, select "move photo", second, introduce a new location, and third, save the new location. Thus every feature needs explanations, controls and several steps. Adding features make the interaction more complex, slower and difficult.
In the old system, the easy way of keeping interfaces usable is reducing the number of features. However while "less is more" is a nice slogan, doesn't really mean good interaction design. That is the point of Donald Norman in The truth about Google's so-called "simplicity". Norman thinks Google is simple just because they hid everything else, but the search box. He believes "simplicity" doesn't mean good interface. It looks simple, because it has few links. However there are a lot of different contents together under them, so these links aren't clear and lack information scent . For example, where is Google Scholar, under "Advanced Search" or "More"?. (more examples in Norman's article).
It's true there are websites with too many unnecessary buttons and options. But it's also true there are too many useful elements that you just can't hide. The easy way isn't enough here.
Direct manipulation can solve some of this problems. Direct manipulation is nothing new, but came to the web with Ajax. In Flickr or Basecamp you just need to click over a title to edit it. Since you don't edit titles very often, you don't need a permanent "Edit" link beside every title, using space and crowding the interface. Also direct manipulation is better than hiding the "edit" feature under a vague general "settings" link.
Direct manipulation is not easy to design, there are still no standards to follow. You can't use direct manipulation for everything, but it can be very useful sometimes.