Yeah it’s more a FF franchise convention than anything else, a way to show that an enemy has “burned through” their life-force so say (particularly magical ones). While the black smoke dissipation is a more literal process with things like the Terminus Beasts, it’s obviously not what happens to living creatures/organisms, as if it did there would literally be no way to eat food, imagine every time you killed something when hunting and gathering it poofed to into black smoke, there would be no food web and/or nutrient cycle existing ever.