Fully answering this question takes us inside the 20-year rule's forbidden threshold, so hopefully that will be indulged by the mods.

The basic proposition of the Truth and Reconciliation Commission came from several sources. One was Archbishop Desmond Tutu and his close associates and allies in the anti-apartheid movement who argued that South Africa would need to engage the harms caused by apartheid through restorative justice, a concept that has gained a broader international currency since the late 20th Century, in contrast to retributive or compensatory justice (e.g., punishing those who were responsible for apartheid or providing compensation to those punished by it.) Retributive justice was seen as the paradigm that had shaped the Nuremberg trials after World War II and to some extent was still employed in other post-conflict investigations and prosecutions within international law.

There were practical reasons for some ANC leaders and others to agree with Tutu's advocacy of restorative justice. To some extent, retributive justice in the form it took at Nuremberg requires the total and unconditional surrender of an aggressor, the ability to imprison and compel those suspected of human rights offenses, and complete access to all surviving evidence of crimes against humanity. This was not the situation in the transition from apartheid: the new South African constitution and the negotiations used to create it in many ways restrained the new South African state from treating former apartheid officials or supporters as defeated prisoners. To suddenly announce that the new government would pursue retributive justice against all former apartheid leaders or key supporters would justly have been seen as a violation of the processes that led to majority rule and the new constitution and would also likely have seriously destabilized the authority of the new government. And yet, doing nothing would also have been seen as a profound betrayal of the spirit of the transition and of the expectations of South Africans who were profoundly harmed by apartheid.

One additional consideration that played into the creation of the TRC was that scholars and concerned activists became aware that from the beginnings of negotiations between the ANC and the apartheid government, after Mandela's release from prison, apartheid officials began destroying government records, particularly pertaining to the work of the security services, but more generally as well. The apparent goal of this destruction was to impede the possibility of later prosecutions using these documents as an important part of their case and just generally to make a full factual inquiry into the history of apartheid difficult. The thought feeding into the TRC was to create an incentive for former apartheid officials to come and tell the full truth about numerous incidents of torture, assassination, aggression against neighboring nations, land dispossession and so on--so the TRC's authorizing legislation stipulated that if anyone came forward and told the full truth to the commission, they would be permanently indemnified from any future prosecution, as long as they in fact kept nothing back during their testimony AND as long as they could demonstrate that the crimes they had committed were specifically politically motivated. Failing to come forward within the specified window of time, on the other hand, left you open to future prosecution and imprisonment.

Overall, I think you can say that the TRC's goal was to create a kind of "founding archive" that would let South Africans engage and discuss the apartheid past and keep memory of that time alive, in the spirit of "never forget", while also creating a kind of nation-making ritual, a crucible that could forge a new South African identity through restorative justice. And that is, as the OP observes, how the TRC has been seen internationally, where it remains a much-admired model that many activists and government have advocated using in their own circumstances.

In South Africa itself, however, not so much. Why? The aspect of the TRC that gained the most international attention were the instances of mid-to-low-ranking former police and security officials stepping forward to testify about their role in some of the most brutal or notorious abuses of power in South Africa after the Soweto Uprising in 1976, for example, the extrajudicial murders of the activists known as the Cradock Four in the Eastern Cape. As the philosopher Lucy Allais points out in her cogent review of debates within South Africa about the TRC, the TRC's remit largely limited it to investigating specific allegations of specific actions that were in fact crimes even under the laws of the apartheid state. (ALLAIS, LUCY. “Restorative Justice, Retributive Justice, and the South African Truth and Reconciliation Commission.” Philosophy & Public Affairs, vol. 39, no. 4, 2011, pp. 331–363. JSTOR, www.jstor.org/stable/23261250 ) Broader forms of harm, with deeper histories, going all the way back to the massive land seizures authorized by the 1913 Land Act, were not part of the TRC's scope of investigation or address.

This right away frustrated some South Africans, who expected the TRC to have a wider range of investigatory interests and powers and were surprised to see it limited to relatively narrow juridical grounds that were actually rooted in apartheid legal norms. Moreover, the TRC never really succeeded in coaxing a reckoning out of the former leadership of the apartheid state: DeKlerk, Malan, P.W. Botha and others essentially took the line that they never knew all those bad things were happening and they didn't order any of those bad things to happen and gosh I hope you find out who ordered it because they deserve to be punished. And that intervening layer--the next rung down in the bureaucracy that took orders from the top officials and conveyed them to rank-and-file police, spies, prison guards, etc. really did not testify, reckoning (I think correctly) that the archival evidence that would identify them as having specific responsibility for specific actions, or at least being accessories, would never surface because it had been substantially destroyed. So this left a bad taste in almost everybody's mouth.

More potently, many South Africans wanted retributive justice. They simply didn't agree with the somewhat idealistic standard of restorative justice most associated with Tutu's advocacy. So there was some anger and frustration that the commission seemed to have settled on a vision in an undemocratic manner, without some form of popular consultation or respect for popular preferences. Some of the victims' families testifying before the TRC drove this point home, saying that they didn't want healing or to grant forgiveness, they wanted the men who had done them harm to be punished. Allais points out in her essay that the TRC's procedure actually contained provisions for retributive justice: a failure to testify fully or a refusal to seek amnesty left you open to prosecution and the TRC strenuously insisted that those prosecutions would follow. But those prosecutions were not part of the TRC process itself (they would follow, and only at the decision of later actors in the judicial system) and for the most part they were rather bungled or never happened.

In her essay, Allais makes a convincing argument that some other criticisms by South Africans are at least partially unwarranted but she agrees that these criticisms arose in part because the TRC did a bad job of informing South Africans about the connections between its various activities. One of the major issues raised at the time and ever since was the seeming lack of concern among the main commissioners in the most heavily-televised hearings for the trauma and suffering of the victims--they sometimes appeared to be unready to offer either some form of therapeutic assistance or any form of compensation to families whose main breadwinner had been murdered or tortured or who had property taken from them as retaliation for anti-apartheid activism. The TRC had a Reparations Committee from the outset, but they did a poor job of promoting its work and of directing people giving testimony to what it had to offer.

I think there were also people inside the ANC or broadly associated with the anti-apartheid movement who were annoyed by the somewhat performative equivalence between all "political crimes" committed during apartheid such that a few ANC members were nudged by the party to step forward and beg for amnesty. The few who did so did it with either unconcealed ill will or open contempt.

There's a final issue that only really started to crystallize around 2001 and has been a source of serious frustration and anger ever since. The whole point of the TRC, on some level, was to create a comprehensive founding national archive of the truth about the apartheid regime that would allow generations of South Africans to come to freely and easily access a rich, thorough body of documentation and testimony. Well, that wasn't true simply because of the relative narrowness of scope of the investigations and hearings, but it turned out not to be true in other respects--the TRC's records are hard to access and some seem to have gone missing. So in this respect, the seemingly simplest part of the TRC's work and purpose was bungled badly.