I knew one CFI who ceaselessly complimented his students - whether or not they deserved it. I got the impression that he simply enjoyed the pleasure of providing pleasure, regardless of the reality. I suspect he believed his students thought more highly of him when he said good things about them in their presence. Perhaps his desire to compliment was driven by a need to confirm his own success as a teacher. Measured by the his students' frustration level, he really wasn't much of a success.
By the time his students were ready for solo, many felt contempt rather than content. They were being misled and now knew enough to know it. The excessive and undeserved compliments left them without a good sense of their actual level of skill and accomplishment. The undeserved compliments did more harm than if the CFI had said nothing at all.
Compliment your students, but do so only when praise is deserved. In this way, you avoid frustrating your students and cheapening the currency with which accomplishment is best rewarded.