Big or small, young or old, dogs need to exercise daily. While some breeds have special needs that have to be taken into account, and dogs do slow down as they age, they still need to take part in some form of daily physical activity. Without activity, your dog will become bored, frustrated and unhealthy. Exercise tones the muscles, helps the body and metabolic system to function properly, and engages the mind. Anyone who has had a dog that suffers from lack of physical activity and mental stimulation will tell you that they will often turn to destructive behaviors -- behaviors that magically disappear once the dog is getting out everyday.
Physically, dogs will also become obese if they are not allowed to burn off the calories they take in during the day. This is especially true if they are being given a lot of treats in compensation for lack of attention.