Sorry, part of this is by design, and poorly communicated by me.

For a long time (all of juju-core up to now), all the machine agents
logged everything at debug.  Logging at the debug level is used
primarily by developers.  Warnings and errors are of more interest to
the users, and sometimes the informational messages.  Some time back, a
new hierarchical logging facility was added.  This allows logging to be
grouped and potentially have different groups of log messages output at
different severity levels.  These groups are dotted names that should be
familiar to people that have used log4j, python logging or many other
logging frameworks.  We call these logical groups "modules".  Modules
have parents, being those the next level up, and there is a <root> which
is the parent of all first level modules.

For example:
  juju.agent is the parent of juju.agent.tools
  juju is the parent of juju.agent
  <root> is the parent of juju

The default logging configuration is:
  <root>=WARNING

This means that only warnings and above (error and critical) are logged
by default.

On the command line, there are two ways to change this.  You can specify
an environment variable "JUJU_LOGGING_CONFIG", or you can specify
--log-config on the command line.  The default for --log-config is the
JUJU_LOGGING_CONFIG environment variable, so if you specify --log-config
you override what the environment has set.

The environment variable gives developers a simple way to have the
default logging set to what they are currently working on.  For example,
if I cared about the provisioner and the azure provider, I could do the
following:
  export
JUJU_LOGGING_CONFIG=juju.provider.azure=DEBUG;juju.worker.provisioner=DEBUG

This would get combined with the default of <root>=WARNING.

NOTE: setting --log-config doesn't show the log file on the command
line, but does propagate the logging configuration into the environment,
so all agents that start up get that logging config.

To show the log on the command line, now use --show-log.  The --debug
has been kept to be short-hand for "--log-config=<root>=DEBUG
--show-log", and --verbose has been deprecated with its current meaning
(we intend to have --verbose mean 'show me more output for the command I
am running', as logging and command output have different audiences
almost all the time).

If you are looking at the agent log files, or the debug-log command, you
will notice that the agents all start logging at the DEBUG level, but
once the internal workers are up and running, you'll see a line like this:

2013-09-23 15:56:21 DEBUG juju.worker.logger logger.go:45 reconfiguring
logging from "<root>=DEBUG" to "<root>=WARNING"

Every agent now has a worker that allows the logging configuration to be
changed on a running environment.  The "<root>=WARNING" that the
configuration is being changed to is the default log-config specified at
environment bootstrap time, and if one isn't specified, it defaults to
warnings.

To change the logging config of a running environment, you can use the
existing "set-environment" (or "set-env") command.

juju set-env 'logging-config=<root>=INFO;juju.provider=DEBUG'

and this is then propagated through to all the running agents.  Note
that this is NOT additive.  So if the existing logging config was
"juju.provider.azure=DEBUG", and it was changed to "juju.agent=DEBUG",
the juju.provider.azure would default back to the parent's level, which
would be WARNING.

You only need to specify the root logger if you want to change it from
WARNING to something else, as by default it is set to WARNING.