Tips at Restaurants

I've never quite understood why people leave tips for their meal servers when the service is mediocre or bad. Tips used to be left as a thank you for exceptional service or for those who go beyond the norm. Apparently, 20% is expected these days. Which, by the way isn't expected in Europe. While visiting Italy I was told that sometimes leaving a tip is considered an insult as the waiters/waitresses are compensated well.
I'm perfectly happy to leave a tip as I know here in the U.S. the wage for servers is quite low, but what annoys me (and I know this sounds petty but after all I am a penny pincher) is when the cost of the meal is rounded up so that only dollar bills are given as change. My view is that if the server chooses to help themselves to a tip I don't leave any additional money. At one time I asked a manager about the new trend and he said he wasn't aware of it and didn't encourage it. He then gave me a gift card for another meal for both me and my friend.

What are your thoughts on tipping?