I believe the mods they are talking about are dat mods which there were literally thousands of for FFXI (PC client only since you had to change files within the game's folders on your computer for them to appear in the game) their only use was changing the way things looked graphically, similar to the Glamour system we have now but you could change the file of a monster and if done correctly, would change its appearance in the game and it would walk/act appropriately based on TP skills and such. I know a few people who changed some mobs in FFXI because they either didn't like the SE original (an ex of mine changed Spiders to Moogle because she was afraid of spiders) and another friend who changed Scorpions (namely the ones in Abyssea - Tahrongi because it made it easier for him to see his character during Fell Cleave burns. They have no impact on gameplay, just make it easier to see sometimes. There were even some people I know who would create their own unique equipment in different software so they could make their char look better to their own personal liking, it didn't effect the game any, just made it more appealing to them visually I guess.

However I could be wrong and they're talking about a completely different type of mod.