familiarity means closeness, means lack of formalities, means knowing all the ins and outs of others, means lot of expectations that all results in arising of causes of dispute and breeding reasons for quarrel or contempt, as expectation can't be calculated and very difficult to be fulfilled in this world where everyone is busy in his own affairs.
On the other hand in formal acquaintances we know little about others and take more formal care and pay more formal respect so there is little cause of quarrel or contempt. a reasonable distance in relations so is necessary to avoid quarrel and contempt. rightly said, a hedge between keeps the friendship green and familiarity breeds contempt.
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From @nitinaryan