I was playing through SWTOR and designing my (as of yet) theoretical Sith Assassin. This brought about some thinking about the logic behind LS Sith runs, and about characters like Lana Beniko, Uthar Wynn, and Yuthura Ban; y’know, the ones who do not act like they start every morning by inhaling a mountain of cocaine. There are also quieter, more nuanced Sith like the heretic Darth Traya from KOTOR 2. They're certainly Sith, but they don't fit the usual pattern of what we have seen of Sith in Star Wars media; the stereotype of a cackling maniac with Force Lightning in one hand and a lightsaber in the other.
To discern the mentality behind the Codes, it helps to think of the planets the Orders consider their place of origin. Tython is a lovely planet with a temperate climate where resources - food, water, diverse wildlife - are plentiful. Compare to Korriban, which is a cold-climate arid desert with lots of nasty, poisonous wildlife that's marginally inhabitable. A diverse and hospitable ecosystem would have helped foster the Jedi mentality that everything has a place in the environment, things work in harmony, and resources are plentiful. The harsh environment of Korriban would have the opposite message; conflict and chaos are the way of the universe, everything has to struggle to live, there are never enough resources to keep you and your neighbor alive, and altruism is the fastest way to die. This may factor into why the long "understanding" the Mandalorians have with Sith and why, despite their lowly status in the Empire, Twi'lek Sith do pretty well for themselves - their cultures also center around harsh environments and the reality of not enough resources for everyone to live.
Absolutely nowhere does the Sith Code say “behave like a bloodthirsty idiot." So, how would a relatively sane Sith work?
Peace is a lie: Where there is life, there is conflict. This is inevitable. Yuthura Ban explains how it is not the Sith imposing the law, it's just a fact of the universe at large. The apex predator of the jungle isn't evil; it's just trying to survive like everything else. If there's no conflict, there is no life. Conflict forces growth, change, adaptation. There’s only so much food, water, sunlight, good soil, and other resources to go around. In KOTOR 2 Darth Traya pointed this out when it came to the Exile and the Nar Shardaa beggar. If the Exile gives credits, it means the beggar is now a target and it shows him being mugged. To refuse him credits means, in anger, he goes out and mugs someone else for credits. By Sith mentality, the beggar is better off if you don't give him credits, as he had to go out and get them himself (at the expense of someone who couldn't defend what little they had). However, Traya also would voice her blunt disapproval when it came to solving every issue with a lightsaber. In fact, she snidely berates the Exile early in the game when they announce an intention to build one, with a little extra snark if you're playing male. The way she approached any given conflict was teaching how to look at the larger picture, on how to push a little here and a little there to make an existing conflict situation work out in your favor. With luck, and a little skill, you come out ahead and without any inconvenient enemies to worry about.
This may also explain why Sith and Mandalorians tend to have an understanding. Mandalorian mentality and honor means going out to find the biggest, nastiest thing the galaxy can throw at you - a tough bounty, an enemy base, building your base in the most inhospitable environments possible - and conquer it, then immediately go for the next challenge to test yourself against until either age or the superior fighter kills you. Conflict is not just life form versus life form, it’s against one’s self and the environment. Which brings us to the next point.
There is only passion: Yuthura Ban explained is as what keeps even the most rudimentary creature alive - the will to live. Sentient beings aren't any less subject to those forces. This also factors into why Sith have an obsession with immortality. It's all about trying to live to fight another day. The Jedi Code ends with "there is no death, there is the Force," which sounds either laughable or like an outright death-wish. This is why mercy and compassion are heavily discouraged; there is not enough resources for everyone to live, and if you try, you will get everyone killed, including yourself. Seeing as no one wants to be the guy stepping into the airlock for some alleged greater good...well, see "Peace is a lie."
Picture traveling through the Dune Sea. There’s a distressing lack of resources needed to stay alive. You’d like to stay alive. The environment wants you dead. Your will to live must be greater than the environment’s will to kill you. However, passion is like energy. Dissipated energy is worthless. Focus the same energy through crystals and emitters and you have a lightsaber or a power turbine. It’s not enough to be angry or fearful - the point is to focus it into something useful, like determination to survive. You can use your anger at whoever or whatever stranded you there and use that to motivate yourself that you won't rest until the responsible party has regretted the choice to strand you. You can use your fear of dying to motivate yourself to keep going.
Through passion, I gain strength: That desire and passion to stay alive against an environment that wants to kill you will require you to draw on whatever resources you have and hone them in order to get what you want, that being survival. Your will to live and your resourcefulness need to keep you going even when all else fails you. Nothing fights harder than a trapped animal or the one with nothing to lose but his life. All that passion to live will focus itself in finding a way to survive.
Through strength, I gain power: Your will to live enables you to keep walking, to look for animals, and use your wits to know where there are animals, there is water. Having to test yourself and use your wits and will to stay alive will make you better equipped to keep surviving. With every attempt to find water, you will be more savvy about what to look for. Every time you have to kill an animal for food or grub for plants (again, where there's life, there's water) will make you smarter about what to look for next time. The desert wants you dead and every hour you survive, every sip of water, every mouthful of food, every moment of shade is flipping the metaphorical bird.
Just because you gain one victory, doesn't mean you can sit on it, however. You may have found a small oasis or a small bit of food, but you have to keep moving. You will probably have Sand People or hostile wildlife in addition to the hot sun, and every step, despite the hardships, gets you closer to your goal.
Through power, I gain victory: You’ve persevered and survived the desert so far, but you are thirsty and hungry, tired, and need a ride back to civilization. You come upon a small settlement - plenty of food and water, maybe a speeder for hire, but they won’t just give it away. After all, it’s the Dune Sea and they want it as much as you. Now, what are your options? Where are your strengths? Can you negotiate for it? Can you trick the locals into giving you some? Can you steal some while they are distracted? Can you light your saber and threaten or kill them? How can you use what you have to get what you want when there isn’t enough for everyone?
Yuthura pointed out that victory means you have to prove your stills are superior to your opponent's. In the case of the desert, your skill in surviving proves greater than the desert's skill in killing. Negotiating or trading for supplies when you have nothing means you skills in haggling are greater than the merchant's in keeping his price. Stealing it means your skills as a thief are superior to the guards' skill in catching thieves. However you obtain the water, you have prevailed in your desire to live over their desire to keep it - victory is yours.
Your victory is in using your strengths and the power you developed to get what you need; whether that be your intelligence, your stealth, your cunning, your charisma, or your lightsaber.
Nowhere in this does it state that all conflict has to end in violence. Conflict is inevitable, but Darth Traya was the one who pointed out that a better victory than killing an enemy is to convince an enemy of your convictions through strength of charisma, principle, or will. Victory must be in proving your ability is greater so that you can hold on to what you obtain, otherwise, you'll constantly be fending off challenges that fritter your resources away.
Through victory, my chains are broken: You have used your passion to survive and gain strength, your strength to gain a victory, and you are no longer thirsty, starving, and alone in the middle of a hostile desert. Of course, all the victory really means is that you are free to face the next challenge - like hunting down the one who stranded you there.
Yuthura explained the idea of "chains" as the restrictions others place on us and the restrictions we place on ourselves. The end goal of a Sith is to do as they wish. Through passion and power, they seek greater freedom to pursue what interests them, and can defend themselves against whoever or whatever wants it just as much. The constant conflict against those chains and overcoming limitations bring a Sith closer to reaching their full potential, to keep seeking the next challenge over their environment, their enemies, or themselves. The end goal is a nebulous idea of perfection, but for most, it's the journey towards finding and overcoming their limits, and using the constant state of conflict the universe favors to work for their benefit.
The Force will free me: You have won this challenge, and survived the desert. The Force and your passion, strength, and power have allowed you to come out on top, but guaranteed there will be another challenge and you’ll have to put what you learned here to use. Yuthura pointed out that Sith view the Force more as a tool or companion that teaches by adversity and challenge. Those who can master the realities of the environment and overcome adversity thrive, those who cannot wither and die.
The most triumphant (if one can call it such) of this in the Star Wars universe was lampshaded directly by Matt Stover in the novelization of Revenge of the Sith. After Ruusan, the Jedi became more insular, stagnant, and did everything to resist the idea of challenge or change. They recruited infants for indoctrination, they isolated themselves from the wider galaxy and outside opinion, squashed dissenting opinion of any sort, and were all set up to fight a war that was over before Yoda was born. The Sith, however, adapted by the Rule of Two (to stop their chronic infighting problem), and adopted an incredibly long-term strategy of stealth and secrecy. In the end, Darth Bane won. Palpatine just threw it away by resting on his laurels and making the same mistakes as his pre-Ruusan predecessors.
There's nothing in the Code specifying you have to limit yourself to solving everything with a lightsaber, and plenty of examples as to why it probably isn't a good idea to do so anyway. In the context of struggling to survive, building your strengths, mitigating your weaknesses, constant self-improvement, and using what you have to get what you want, the Code in and of itself is not necessarily evil. It's a logical reaction of the harshness of Imperial society and its chronic lack of resources. It also explains why even the lightest of light-sided Imperial is still a villain in the context of the universe.
Also, ask yourself why the Republic can last 20,000 years while the various incarnations of Empire tend to implode after a couple centuries at most. The Sith/Imperial mentality is a very logical idea when it comes to individual survival, but you can't build a stable, functional society around it. Their society doesn't even know what to do if it does have abundance, so they squander it on vanity items instead of long-term investments - see Dromund Kaas where the rebelling slaves are building monuments to the Darths while the planet lacks paved roads between the city and the spaceport, forcing all trade to slog through the predator-infested jungle. The particular brand of crazy that the Dark Side tends to instill in its users also explains why the Empire in general and the Sith in particular are so good at self-sabotage, limiting itself to the stupidly violent option to the point where the only real law of the Empire is “mine’s bigger.” Add the chronic backstabbing and power struggles, and you end up with an inherently unstable society where the superior can't trust the subordinate, the subordinate can't trust the superior, racism runs rampant and wastes the skills of at least 90% of the population, and there are fewer experienced Force wielders, soldiers, officers, etc.
In the final equation, it isn't the Sith Code itself that is inherently wrong. And, yes, it can support a handful of gray or Light-Sided Sith. The issue is the Code's basis in individual survival at all costs added to the mind-altering properties of Dark Side useage that insure chronic instability and reliance on violent solutions.