what happens when team think Agile is Micro Management?

Agile makes life easier is a myth. It all depends upon the kind of project you are undertaking. Mostly people follow scrum for the heck of it. It is most suitable when the requirement is complex.  If your requirement is crystal clear and frozen then why use Scrum ?

Apart from this Agile has nothing to do with making life easier for management. It makes life easier for customer.

Even if we acccepted it as true: What's so bad about making life easier for managers, if it doesn't make life harder for everyone else?

I have had similar conversations with developers and testers.  I ask them how many times when using old water-fall, requirements based development practices have they worked for months to build something that is never used.  Or that the end user says "that really isn't want we wanted" and asks for major modifications.  There has never been one that can say it hasn't happened unless they are a very recent college graduate.  But even then they can relate to it based on college projects that they had to build for grades. 

I then explain how the principles of transparency (information and work), inspect (information and work), adapt (information and work) coupled with an iterative delivery model will actually allow them to build what the user wants and will use.  Sure it may take them longer but it is a lot shorter than building for months and then having to scrap it and start over.  It is also a whole lot more satisfying to deliver parts that can/will be used and build up to the end product.  

Many developers/testers these days are gamers.  You can also use the analogy of how satisfying it is to complete a quest but that it usually requires that you complete milestones along the way to ensure you are on the right path.  Isn't that very much Agile in graphic form?

Does it make a Manager's job easier?  Speaking as a past Manager, not necessarily.  If the teams are high functioning teams it makes the daily "management" easier.  But it makes personnel matters a bit more difficult because often the company wants to manage in a individual hierarchical manner with individual rewards.  That is really difficult to do when everything in their daily life is based on team success and not individuals. If a Manager is actually embracing the Agile practices, management really becomes more difficult because they no longer control things, they are there to help react and remove obstacles.  Management in Agile practice shifts from command-control to servant-leadership.  It usually means dealing with outside-the-team people to keep them from preventing the teams from doing what they should.