Just because people (mis)use the term in ridiculous ways that doesn't mean it doesn't exist and have a meaning, or that it's purely subjective. It's another word for 'bad' difficulty or 'punishing' vs 'challenging'.
Basically games are designed with specific mechanics and gameplay cycles involved. In FFXIV DPS checks are one of them, as is dodging AoEs, 'team jump rope', and otherwise executing manuevers. These are all designed/challenging/good difficulty. They're there for a reason, and are all keyed very specifically. FFXIV has very very little artificial difficulty. I'd suggest there's some in RNG issues with farming things and crafting, but that's there to be a time sink. Arguably, there's also the increase in open world mob difficulty in HW (but those mobs are so easy anyway, that it's hardly worth mentioning).
Artificial/bad/punishing difficulty is the opposite of designed difficulty. The most common place it happens is when enemy parameters are tuned up (damage, hp, etc) but nothing is altered in their actual mechanics. Imagine if T9 savage mode had all the mechanics exactly the same, but Nael had 5x the HP and did 3x as much damage, as opposed to adding extra meteors during heavensfall, and divebombs and adding an extra thunder and just generally adding more mechanics. That's artificial difficulty. It's no longer tuned to allow people to learn the fight, or increase their skill. Indeed, as you have to have done T9 normal to do savage, it's no longer skill at all that prevails, just endurance.
It's most often seen in difficulty increases in other games (go into Very Hard and instead of AI or mechanics changing things just hit you harder and absorb more bullets).
Or when things aren't telegraphed at all--which is to say something happens you have no method of reacting to until it's happened. All your choices need to be informed; if you're just shooting in the dark that's artificial difficulty. You need some kind of hint that something dangerous is going to happen, or, at least, time to react when it does. You need a way to play around things (the ground AoE markers in FFXIV are a great way of ensuring this doesn't happen here, or at least very very rarely). Lacking these is the equivalent of 'rocks fall, everybody dies, no saving throw.'
There's also things like bad camera controls (most early 3D games, most noticable in platformers--how many times did you miss a jump in Mario 3D, not because you were incapable, but because the Camera refused to stay lined up right?), or buggy, glitchy things. Or situations where the rules in the game change without warning or consistency (this kind of leads back to telegraphing, if the rules are consistent they telegraph themselves--such as being able to look away to dodge gaze attacks in FFXIV). And, of course, iteration time. Long iteration time--which is to say you die and go back 30 minutes of gameplay--is punishing, not challenging or fun. Again, FFXIV avoids this pretty well with instant and cheap teleports--although I'd say it could be improved by having you rez at the nearest aetheryte to your death instead of your home point, but no one's perfect.
ANYWAY, the point of all this is that, no it's not entirely subjective. It's part of game design and important for design philosophy to understand and identify the difference between artificial/designed or good/bad or challenging/punishing or whatever two adjectives you want to use for difficult.