All our applied mathematics has evolved under the assumption of continuity, while all basic processes in Nature appear to be 'discrete', meaning non-continuous. (The prototypical example of continuous model is the inner-product vector space, of which the Hilbert space of QM is a special case.)
However, instead of looking for a fundamentally new formalism, or formal language, explicating the observed and formally unfamiliar discreteness, for some *irrational* (but quite human) reasons most physicists believe that one can somehow 'save' the conventional formalism by "discretizing" it . Well, the bad news is that, from a formal point of view, this does not make sense: you cannot do this to any formalism without destroying its integrity (that is how formalisms are structured). Heisenberg has a paper on this topic.
From the experimental point of view, since *all* our measurement instruments are discrete, we have no obvious way to verify the continuity hypothesis.
So to compete with the continuous formalism, we need a fundamentally new formalism to tell us how to interpret and to deal with the discovered ubiquitous 'discreteness'. Obviously, the new formalism must offer some radically new insights into the nature of reality, together with the new formal tools that should allow us to see physical processes in a completely new light, eliminating, in particular, the unacceptable wave-particle duality.
(Nevertheless, it may turn out later that some 'surrogate' form of *spatial* continuity is valid but not as a basic *underlying* model.)
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For convenience, I will be collecting here just some of the relevant quotes by prominent scientists from the answers below:
1. "If you envisage the development of physics in the last half-century, you get the impression that the discontinuous aspect of nature has been forced upon us very much against our will. We seemed to feel quite happy with the continuum. Max Planck was seriously frightened by the idea of a discontinuous exchange of energy ... Twenty-five years later the inventors of wave mechanics indulged for some time in the fond hope that they have paved the way of return to a classical continuous description, but again the hope was deceptive. Nature herself seemed to reject continuous description …
The observed facts (about particles and light and all sorts of radiation and their mutual interaction) appear to be repugnant to the classical ideal of continuous description in space and time. ... So the facts of observation are irreconcilable with a continuous description in space and time …" (Schrödinger, 1951)
[I want to comment that we don't "feel quite happy with the continuum": we simply have not had any other formalism to compete with it.]
2. "As is well known, physics became a science only after the invention of differential calculus. It was after realizing [rather postulating] that natural phenomena are continuous that attempts to construct abstract models were successful. …
True basic [physical] laws can only hold in the small and must be formulated as partial differential equations. Their integration provides the laws for extended parts of time and space." (Riemann)
[But now it seems most likely that "the basic laws" do not "hold in the small", and hence the logic of the continuous model is broken]
3. "You have correctly grasped the drawback that the continuum brings. . . . The problem seems to me how one can formulate statements about a discontinuum without calling upon a continuum (space-time) as an aid; the latter should be banned from the theory as a supplementary construction not justified by the essence of the problem, [a construction] which corresponds to nothing "real". But we still lack the mathematical structure unfortunately. How much have I already plagued myself in this way!" (Einstein, 1916 letter, quoted from the paper by John Stachel mentioned in my Dec. 6 answer)
4. "Newton thought that light was made up of particles---he called them "corpuscles"---and he was right . . . We know that light is made of particles because we can take a very sensitive instrument that makes clicks when light shines on it, and if the light gets dimmer, the clicks remain just as loud---there are just fewer of them. Thus light is something like raindrops---each little lump of light is called a photon---and if the light is all one color, all the "raindrops" are the same size.
I want to emphasize that light comes in this form---particles. It is very important to know that light behaves like particles, especially for those of you who have gone to school, where you were probably told something about light behaving like waves. I'm telling you the way it *does* behave---like particles." (Feynman, QED, 1985)