The most likely reason for the phaser being used as infrequently and as ineffectively is what I would call "narrative license" or the TVtrope "Thou Shalt Not Kill". Star Trek WANTED to be a show where violence was something Humans did not resort unless forced. This meant more often than not, the weapon technology was always dumbed down or made less effective than it should have been.
Using the phaser effectively still required you to pay attention:
Wide area attacks work best if you don't have to discriminate between your targets.
Armored or shielded targets could survive your wide area beam and return fire.
Since the stun setting is still a release of nadion particles, we have no idea what long term effect such releases have on equipment. Even if there are no visible effects, it could conceivably require recalibration or replacement if caught in the particle release.
Star Trek did try their best to expand the functionality of the phaser over time but in most cases, hand-held weaponry seemed almost an afterthought during the course of the show. At least the early phasers looked like weapons. Note the lack of sights, meaning these were meant to be used at relatively close range.

Note the lack of sights and the even stranger weaponry configuration of the Next Generation Phaser. It looks more like a remote control than a weapon!

Stay back! Or I might have to change the channel on you!
Memory Alpha does point out the most common stun settings on a phaser are:
Setting 3.1 was enough to cause a Changeling to experience similar discomfort.
Setting 3.4 or 3.5 was determined to be a stun setting that would effectively stun and force any Changeling to revert back into the gelatinous state. (DS9: "Homefront")
A wide-field stun setting was used when large groups needed to be stunned with a single shot. (TOS: "The Return of the Archons")
Some stun settings could also cause unconsciousness. Although mostly harmless when used at these low settings, multiple phaser stuns like this could result in injury and death. (TNG: "Samaritan Snare")
There was a heavy stun force setting and a maximum stun setting also known as full stun charge. (TOS: "Tomorrow is Yesterday"; TNG: "Legacy"; TAS: "The Eye of the Beholder")
The highest stun setting was strong enough to immobilize a Soong-type android. (TNG: "A Matter of Time")