I think the FATE grinding is two fold.

1.) It's a filler till the next major content release which I'm assuming is 3.0?

2.) I think they realized that after the initial wave of players FATEs would become somewhat empty after time so they implemented a system to keep them relevant.

Personally if I was developing this game I would of avoided the FATE system. I mean, you know they will become less popular over time after launch. No one wants to chase these things down to level up and you can't make their xp too good else dungeons become empty. I think overall FATEs should just be redesigned into rare boss fights that spawn in the world, but that would require revamping the system. Maybe they will in the expansion? Who knows. But then again I know some people that do like FATEs, but maybe we can hope they find a middle ground with it.