"normal difficulty" is not tweaked for the gamer with average talent and skills, normal difficulty in modern games is tweaked to suit persons with below average cognitive skills (or small children really. My neighbors are a 7 year old girl and 8 year old boy with average cognitive skills. and they play Dead Island, Skyrim, Modern Warfare 2 and Battlefield on normal and they have no problems to advance through these games and complete them)

"Hard" is usually how a modern developer imagines the experience they want a typical gamer to experience.

Gaming is not just supposed to be a relaxed ride, but should also demand significant effort and concentration, and challenge is an important part of the experience.

The hardest difficulty settings unless we are talking about games like Super Meat Boy and I Wanna Be The Guy ( I don't want  my head to start bleeding when gaming)

Depends on how good/experienced I'm with that genre, but I usually play on default/medium/normal.

easiest first, then the hardest.

Depends where the game is from; Japan or America/Europe. Especially Americans think we're babies and make their games as casual as possible. Even on Hard their games are too easy.

Hardest option available.

Mostly on Normal. I tend to do pussy mode when i am not really interested in the game and just want to see what it's about.