1.0's specs was extremely demanding for PC and even people with a decent computer had difficulty running it. And while zones were big and open, there was nothing in them and there were a ton of copy and pasted assets. The Black Shroud was basically a copy and pasted maze of repeating pathways.

Downgrading the graphics to allow the game to run on PS3 did have a bit to do it with, but also to allow people with older PCs to play the game as well. One of the reasons why WoW was so successful was because anyone could play that without having a super PC, and the FF14 team wanted to replicate that.