Here's a quick video showing what I'm talking about:
https://youtu.be/hToWKu79Jm0

As you can see, there's a significant delay between one client executing an action and another client seeing that action in their game. And this is with both clients in the same network. This is because the server updates at a very slow frequency. As far as I know the update frequency (server tick rate) has been unchanged ever since it had to be increased in 2.1 because dodging puddles in titan was incredibly difficult.

This delay may not be that big of a deal in the grand scheme of things. The gameplay still works mostly. But there are many things where this delay creates problems. It's the most evident in pvp. The enemy players are NEVER in the position that your game shows you.
Let's say you want to knock back someone away from their team and into your team. This is impossible to do without first stunning the player, walking behind them and then executing the knockback skill, hoping he didn't purify and start moving again before the server tick happens and you actually punt him into safety.
Other issues include trying to pass debuffs to other players in savage content (for example P4S phase 1), trying to do mechanics that involve the positions of other players (for example the last boss of the 24 man raid Aglaia) and overall trying to avoid other players.

Example 1: Passing debuffs
If both players run into and past each other there is a high chance that the server tick happens before and after the two players touch and the server never notices that the debuff should be passed. Of course you can decrease the chance of this happening by having one player stand still but it will still happen unless one player stands still within the other player for a short but significant amount of time.
Example 2: Balancing the scales
There is a mechanic in the last boss of Aglaia that requires a certain amount of players on separate sides of the arena. It happens with annoying frequency that the scales are balanced but 3 or 4 players keep running back and forth because on their client it still looks like the other players are moving when they aren't and they move in response, continuing the cycle and resulting in a wipe. Don't get me wrong, I like the mechanic, it's great. The described issue wouldn't happen (or at least considerably less often) if people could see where other players ACTUALLY ARE in real time and didn't have to predict their position 2 seconds into the future.
Example 3: STOP FOLLOWING ME
You know this one but I'll explain anyways.
Let's say two players have aoe markers on their heads and they run in the same direction. In their client it looks like the other player is slightly behind them, so they expect the other player to move back. In reality both players are running right next to each other and they both die screaming at the other player to stop following.
These are the most common examples. There are more but I think you get the point.
As I said, this isn't game breaking but for me (and I'm sure many other players) this is a big source of unnecessary frustration and I'd like Creative Business Unit III to fix this.

Now I'd like to preempt some arguments I'm sure will be coming.
"It's not a big deal, just adapt and get good." -This isn't hard, it's just annoying and frustrating and adds nothing to the game.
"There are more important things they need to fix" -Then fix those things as well. You don't need to tackle one issue after the other.
"It's too expensive" -The game generates millions and millions of dollars and Square Enix makes several billion dollars every year. They can afford it.
"Spaghetti code/it's too hard" -Yoshida said in an interview that there are currently no issues with the game engine that would prevent them from doing anything.
"I don't care/This doesn't affect me" -Start caring. You pay for this game, demand better. Improving the game in one aspect makes the game better for everyone.

"Japan doesn't complain about it, so nothing will change." -This is the one I'm worried about. The general impression I have about SE is that unless an issue, that isn't talked about much in japan, blows up in a very big way in the west there is a very low chance for change (see the GCD delay thing).

Thank you for reading and I hope for your support.