The Noses of the Noseless

What's so bad about a pug having a short nose? It's cute. And French bulldogs are such funny creatures. However, as descendants of wolves, dogs should have a really long nose. What happens when this nose is shortened so much? And why do dogs reportedly sweat inside their noses?
Do snub-nosed animals have any additional problems? Are these really all congenital malformations? And if it's so bad—many European countries want to ban the breeding of pugs and bulldogs altogether—what exactly is so malformed?
Our neighbors' French bulldog isn't allowed outside in warm weather, and if he plays with other dogs, he immediately gets tired or even collapses. Does something like this require surgery, and what are the options?