Why is fermentation legal, but distillation is not?!

The real reason: taxes

The advertised reason: it's dangerous to distill because you're combining flames and flammable liquids. There's also the chance of producing wood alcohol (methanol instead of ethanol) and there's been a history of crooked distillers using crap products, dangerous procedures and lead solder to make their hooch.

That said, illegal distilling uses shortcuts because it's profitable because it's illegal because it bypasses the taxes. If you home-distill, you're probably not going to use lead solder and copper piping and formaldehyde.

Oh, and you can't make unlimited quantities. Home wine/beer making has some upper volume limit to keep people from selling it.

In the USA, due to Pres. Carter, a person can brew 100 gallons of beer for personal consumption at home.
It's due to taxation of alcohol.

American Homebrew Association.

That is a bit weird, but I'd guess it would be to do with the levels of alcohol being produced... since most spirits are 70+ proof.

Thats America for yah .

Because the law says so.