You're actually thinking about that slightly backwards for a lot of the 'better' games.
HP restoration is low AND target damage is low.
Having lower HP restoration values makes it easier to balance PvP AND PvE. Mobs don't need to have massive jumps in damage, they hit for 5-10% of your HP and you spend your time 'figuring out how to make sure their big abilities don't go off' and 'managing your HP inflow'.
L2's design warped my thinking too much. If I was solo - I had no buffs so any stronger mob would do a ton of dmg. If I was in a party - it was always a constant one with a healer and an MP manager. The "middleground" of those would be higher rated servers where you had a full buff w/o a party, but then you'd be fighting the same strong party mobs, so they'd still do pretty big chunks of your HP.
So yeah, if Ashes manages to step away from the L2's buff design and its utter REQUIREMENT for farm - the game would most likely be way closer to what you're saying. And at that point I'll just learn to play it the way it's meant to be played.
A basic example then of the difference from my experience. Note that I'm VERY explicitly targeting 'a mob that has a design that only exists because they were trying to get a function, not a theme'. Not all FFXI enemies are this way, nor are they all as interesting, but you'll understand what I mean in a moment.
FFXI Goblins all carry bombs.
They don't hit super hard with their melee attacks. But the bomb TP move can. Otherwise it does decent AoE fire damage, approx equal to all in party nearby, it doesn't 'divide up damage'. But it's still not crippling. Nothing that a Tank wouldn't shrug off EVEN if taking damage normally. Have a White Mage with you to ward against Fire Damage and you're even better off.
But AoE healing is EXPENSIVE. And therefore if you were to 'keep pulling Goblins', eventually people's HP starts dropping into a range where it is dangerous. Why do Goblins have bombs though? What made THAT a thematic goblin concept?
It isn't. It BECAME one, but it's a mechanical thing they were going for and chose to put it on the 'first and most ubiquitious Beastman enemy' to make them a threat and teach you what to expect from damage based enemies in the game.
There's a second function to these bombs. They have a 'suicide bomb' mode. TP moves are random, and that version can be selected randomly. It DOES look different, but only if you're actually looking at the Goblin (they drop the bomb instead of lobbing it). It does damage by how much HP the Goblin has remaining. MOST of the time this isn't enough to kill you. If you were solo, this move is technically almost GOOD. The Goblin dies after using it, you get the exp, if your HP was high, you didn't die, even if you got low. If you did enough damage to it first, you didn't die because it's HP wasn't high enough.
But if you are in a party, and you aren't on the ball when the Goblin's HP is high, someone might die if you had been fighting Goblins before then and didn't top off everyone.
You don't think about 'how much standard damage a Goblin does' when fighting them if your tank is half-decent. You think about 'How much Mana it will take for your whole party to tank through multiple Bomb Tosses' and then play around them.
But you can't just go 'well we barely need a Tank then' because their OTHER move is 'Goblin Rush' which is like 5x melee strike damage (It's only 3-4 hits, so that's separate).
Relative to mana management and healing, therefore, you have 'a mob that doesn't do crippling damage unless you aren't paying attention but requires higher mana management skill (or lots of resting) to face', that STILL has the ability to just drop people if you aren't paying attention, and in a really strange way too.
Assume you pull one without full HP because you're confident that your healer is about to top you up before it even arrives, and your Healer suddenly lags offline. The immediate thing to do is 'nobody engage except Tank and even they should hold back' -> 'Mage puts up defensive spells that they normally don't waste mana on in a group' -> 'Mage nukes the hell out of the Goblin so it doesn't have enough HP for suicide bomb to kill everyone' -> 'Mage sits still while Tank pulls it off them' -> 'wait for healer to return'.