As a writer myself, seeing other writers holding back the heroes in any manner is one of my pet peeves. It feels like padding and a waste of my time. If the heroes are weaker or stupider than the villains or if they refrain from taking some action that could resolve the plot it makes my blood boil because I do not tolerate such things in my own writing. I do my best to think of how my heroes could best resolve a given conflict, and, if such a solution is within the bounds of their characterization, to implement such a solution regards of what it does to my plot. This is because the plot will be stronger for it.
"Holding Back the Phlebotnium" as Tvtropers call it, feels awkward and weak. It is comparable to a story having termites to allow the villain to march to victory only for the heroes to suddenly stop them at the climax. If examined too closely, the whole thing collapses. The climax of such a story is liable to fall flat because it feels like the author took their foot off the hose instead of writing a truly engaging and challenging villain.
I've often said that plots should be driven by characters instead of characters driven by their plots because this is one of the pitfalls that is avoided.
On Tvtropes this is one of the things they snark at. It is prime snark bait for sarcastic tropers to point out this sudden weakness or lack of intelligence and state how convenient it is for the villain to fulfill their Evil Plan. The same goes for overly powerful heroes but this one comes up more often because if the heroes are over powered from the start then the story will be very short.
Indeed, I recognize how important it is to make the villain a credible threat and that if they were foiled quickly than the story would end in the first act. However, is it too much to ask for a villain that advances to the final act to match wits and powers with equally capable heroes? I want to see a tennis match; advantage tossing back and forth with each side accumulating victories and losses. The only time I want to see idiots battling idiots is in a comedy; in which case I don't care who wins because I'll be more interested in the slap-stick and jokes.
I had such a problem myself with the first draft for the third (yet unnamed) book in the Journey to Chaos series. I was holding back both sides (hero and villain alike) in order to make the scene shorter and neater and make some stupid Honor Before Reason style point. Looking back I thought it was ridiculous and rewrote it. This is a crucial point in the chess game; one of those 'turning points/ decisive battles' you hear about in history and so it stood to reason that neither side would hold anything back. Thus, I had my hero use the full extent of his magical power and my villain unleash all their resources. Not only was this more fun to write but it makes more sense in terms of characterization and comes to a sharp, decisive, point. The former meandered around and fell flat.
Instead of dumbing down the heroes, make the villain smart enough to outwit them at their best. Instead of forcing the villain to trip at the finish line, make their defeat the culmination of a story's worth of heroic efforts. Instead of being snark bait, you'll be praise bait.