Something crossed my mind. I had been discussing another issue with the game last week and now I connected the dots after the information you provided me sunk in.
There is a major issue with how this game uses memory. I discovered it while monitoring my frames per second. In Gridania my fps goes above 90, and in other areas such as near camps, it averages at 60fps with no spikes. However, if I travel to Ul'dah which is always most busy, I had noticed that I consistently get low spikes, sometimes going as low as 30fps which is the bare minimum for smooth play in this day & age.
Now we have all heard the complaints about how demanding this game supposedly is for hardware, while the truth is I can run it on a nvidia 9600GSO with 348MB VRAM at the office. It is the same situation on that inferior PC. outside of busy places the frame rate is more than acceptable yet when I travel to a city, it gets very consistent with spike drops in fps.
Now I bet you are all wondering how I concluded that it is an issue with how the game uses memory. I had almost came to this same conclusion last week, but after reading direct from the mouth of SE that they have issues with the 'cost' of memory, I was able to finally see what the issue is.
Any of you can try this for yourself. In general FFXIV will sit with aprroximately 1GB of RAM usage total (physical + virtual) when you are in a quiet/not-so-busy place, as well as using from your VRAM. If you go somewhere busy such as Ul'dah, you will notice that RAM usage begins to rise. This is to be expected as there are other players around. However, at around 1.7GB total, it stops rising. I've checked this on two systems now and it is always the same behaviour, it caps off at around 1.7GB of RAM usage. Regardless of how much RAM is in your system and whether or not you are using a 64-bit OS, this is where it caps.
Why is that an issue? It's an issue because the game actually needs more memory than this. As it is not taking more, the game is throttling itself. It is creating it's very own bottleneck that ignores the power of your hardware completely. That is why when you are in a very crowded place, the spike drops in fps happen. I can only assume that they put the limit in so that the game would be less 'demanding' on older hardware or where people have less RAM. But taking that into account and their supposed reasons for having to copypaste terrain, it seems that FFXIV is completely retarded when it comes to memory management.
Before anyone says it, of course I'm aware that most games only use 2GB ram max and it's almost like the limit at this current point in time. I'm a warlock, my mind is more knowledgeable than you could imagine. For the record my main PC is i5 running at 4Ghz with 6GB RAM and a 560Ti GPU. The spike lags in the city are absolutely nothing to do with hardware, I don't think we need to investigate any further. This game needs to be completely redesigned from the bottom up if they want to get anywhere with it on the coding side...
Or we can continue waiting months at a time for big updates too.