[Star Trek] What is so damn scary about Talos IV?

I just started watching The Original Series and I cannot fathom why the Federation is so threatened by this planet that interacting with it is the only remaining death penalty on their books.

For those that don't remember, the aliens there are powerful psychics who can read your mind and create intricate dream worlds to make you experience. And I guess they get something out of it. Entertainment maybe.

Are illusions so dangerous? Are these not the same people who later give their ships fucking holodecks? I can get not sending people there but killing anybody who makes contact?