The graphics in FFXIV are great for what they are, graphics of a MMO world, superior in this genre. While not being able to match texture details and effects of a modern single player fps game i think square enix' engine is amazing. You should also keep in mind this is a multi-platform title and not solely optimized for PC hardware - one reason why its already so demanding. Crystal Tools is build to be highly portable, they wanted to run the game on PC, Playstation 3, maybe Microsoft's Xbox360 at a later time and even Linux and Apple OSX clients are not out of question. If they add super realistic water reflections or whatsoever nobody could run it.