FATES are supposed to be what brings life to the otherwise static overworld. So you will see NPCs traveling, or groups of unusual mobs descending from elsewhere, etc. FATE chains especially are little mini storylines unique to the zone that are told through big scale battles. As for why you don't see tons and tons of NPCs doing stuff like tilling the fields or traveling, outside of the FATES, the lore reason is that the monsters make it dangerous to travel or farm in many places, so it only happens in well guarded (read: low level) areas.

Could they have done it better? In 2021 with modern technology, absolutely. I've seen some amazing procedurally generated landscapes in modern game engines that look amazing and the same stuff could be applied to anything - monsters, NPCs, beast tribes, other adventurers. For 2013 tech, the FATE system (itself any evolution of a proto system from FF9 if I remember right) was an elegant solution that immediately displays "something different is here" on the overworld map.