Do people really favor an FFXI grindfest format?

[Physic]

you can't level without "grinding" in any rpg... I guess all the rpgs throughout history all had bad mechanics.

If by grinding you mean any activity that gives you exp, then no. if by grinding you mean fighting things because they are there and they give EXP/SP alone than yes you can have a game without grinding, in this context i was referring to ffxi mob grinding as the stated in the OP.

now if you mean ffxi type grinding is necessary, i disagree.
Most Rpgs were designed so that you didnt have to fight extraneous battles to be high enough for any battle, while you had the option to walk in circles and get agro to be overpowered, in many, the reward would diminish the longer you stayed in the same places, and it was totally uneccesary to complete the game or enjoy the content, while i understand that some people enjoy it, and its a viable way to play in an open world, i dont think it should be the sole way of leveling or the main way, just an option. Build more fights into quests and stories, reward exp, or whatever, but generally in an rpg progression isnt based around killing mobs, in fact if you dont reach milestones in the story, you are usually limited in what you can achieve.