The graphical quality of 1.0 is significantly higher than 2.0. The reasoning for this was due to putting a lot of focus on making things look pretty. So much so, in fact, that 1.0 was much larger and even objects like a single plant pot contributed as much to server latency as a single player due to the obscene number of shaders.

The graphical quality got dropped because 1.0 was meant for very high-end PCs at the time it was out, which caused a lot of players (myself included) to be left in the dust. But as technology continues to evolve at an exponential rate, so does accessibility to higher and higher quality graphics. So it is possible that, in time, FFXIV will look as gorgeous as 1.0 again. It just may not be for a while. Maybe a graphical update with 4.0? #wishfulthinking