How good is the game engine of FFXIV?

[Dyvid]

That's not a cutscene, it's a quest from Cataclysm many years ago but you're partially right because this is what a cutscene looks like:
https://www.youtube.com/watch?v=JkfP1G-gO0U

What I can see is that the struggle of movement is the same but the textures are much more sharp, smooth and clear in comparison to the ones we have in Stormblood, what's the reason? Is it a modeling issue or an AA issue? Not a single hair in FFXIV looks as smooth as the hair of models in BFA

You simply can't compare two different games together like that. First they are form two different county so the art style is different, then you have the fact that they use completely different game engines. Also WoW has two different cutscenes, one is using ingame mechanics and one is animated, WoW Kul Tiras Most of FFXIV cutscene are made using in game mechanics.