Well, it seems that that because most of the SQL procedures and functions in LiF are deterministic or NOSQL or READ SQL DATA, having Binary Logging enabled on the server breaks a lot of things. First thing I noticed out of the box was character creation get's broken.
Error message you'll see in the logs/serverconsole
Spoiler
Setting log_bin_trust_function_creators=1 in my.ini makes character creation work, however, I don't know how safe it is (i.e. do restores from binary logs fail when a certain query is hit or does it miss data during the restore?) or if it works for all queries generated through play. Though, even with Binary logging on and trust_functions enabled, a full backup restore should still work, I just don't know how well a binary log restore after the full restore will work.