Pwrlvl is not the cause of people leaving but it is compounding the issue. About 50% of the content the devs are adding is low level content. There is enough content for low level players to keep busy for months if they play without a pwrlvler.
Now the game has a lack of new players, no one will doubt that... and this game is designed for group play, no one can deny that. New players get the game and cannot get a group and quit soon after. I seen it happen several dozen time. People I know keep telling me they will come back when people start playing together. Everyone being at cap is making the game alot harder to join as a new player, this is primarily caused by pwrlvling most people only had 2-4 50 fighting classes before it was introduced, now most full time players have majority capped levels.
Old players are taking breaks between patches because they finish everything. When in XI it would take literally years to fully cap out a character here it takes only weeks to months. So there is nothing to fill the void in, and spamming the same thing over and over will get boring. They cannot level anymore because everything is capped, and Leveling alts is simply not an option in this game. So less people online, compounds the low server population, which makes people quit because the server populations are too low and it snowballs.
1.18 and 1.19 added all this low level stuff. Tons of quest, low rank dungeons, and various other things. In my linkshell myself and 3 other out of a linkshell of 40 people who are actually still playing the game been to the limsa dungeon. Alot had no clue it existed. Most the ls done none of the quest, many people do not do leves, most have not done the main storyline past a the required level to get class quest. And this is not uncommon. People are not playing the content the game has... because rank < 20 content is pointless when that is literally 15-20mins of pwrlving.
Pwrlvling benefits no one at all. It turns away the majority of new ppl who cannot get pwrleved, and it makes the old players run out of things to do. The low level content is negated... who wants to farm nms or do dungeons for gear that is litteraly outdated in 20mins of pwrlvling.
So pwrlvling has removed the ability to party for the majority of new players, it has caused dedicated players to take breaks (temp quit), and it is making over 50% of what the devs are working and adding obsolete within hours.
There is literally no positives to pwrlvling, I disagree with it is high lvl ppl and low level ppl playing together... it is low level ppl afking or clicking an invite macro every 30secs while a 50 does all the work. That is not playing together. It does remove the grind though, but sitting there for 3-4hrs at a time doing nothing is less fun then grinding.
So none to very very little positives, with potential game breaking negatives with the current pwrlvl system.
The fix is easy... SE needs to enforce the 10lvl gap. Make it where no exploits will get around it. IF it was trully kept to the 10 lvl spread like I believe SE planned for it to be... no one would have an issue with pwrlvling since normal partying would be better in the end.
This is game breaking whether some like it or not is not a valid argument because no one can deny the negatives as we are seeing it now... It is feeding the lack of content which is the bigger problem. If this is not corrected soon or if the devs do not start churning out endgame 5-10fold faster then they are... the existing dedicated playerbase will start to dwindle. Square is helping dig thier own grave with errors like this, I know they have a lot on their plate. But they should not be so blind as to not notice what is happening in-game. This is an oversite, honestly an exploit. I am baffled why it was not emergency patched as soon as it became known. And no one better argue getting kicked from the party to get around the 10 lvl gap limit was intended.