They do allow a small number of tourists, but only on certain guided tours approved by the North Korean government. Tourists must stay with their guides at all times, are taken only to very specific places, and aren't allowed to leave the tour at all. You can't even leave your hotel to go for a walk. You aren't allowed to talk to any North Koreans except for your guides.
Look at Koryo Tours and Korea Konsult and you'll get an idea of what the tours are like.
North Korea is a closed society, and worries about foreign influences, or about other countries sending spies posing as tourists or spreading "subversive" influences on their people. The government keeps total control of all information sources - allowing visitors to interact with people would break that control.
Most Communist governments strictly controlled tourism for the same reasons - the Soviet Union, East Germany, pre-reform China. Cuba allows mass tourism because it's their main source of income.