Oh dear, where to begin.

Yes, Sharlayan is pacifist by nature. They are, in fact, so extremely pacifist that they have extended political leverage to attempt to get others to also be pacifists. They are explicitly not isolationist, because while they hardly ever grant other nations help, it's explicitly help with wars that they don't grant. It's right there, on the nose, stated outright by Fourchenault when he looks his only children dead in the eye and tells them that there is nothing that justifies war (really, this man looked his progeny, his "loved" ones in the eyes and told them that not them, not the future, nothing was worth fighting for).

When their colony existed it traded in and let scholars from other nations get educations there. It was there that they forged the aethereytes of Eorzea, which they then gave out to other countries. They were more than willing to partake in cultural exchange and neighbor other countries until the threat of war to their neighbors reared its head. And iirc they still sent diplomats to Garlemald to try and talk Garlemald out of war. They failed, of course.
But even nowadays they still have ships go in and out of their harbor.


It's also all true that they have assassins and create instruments for battle with the nouliths and their version of astrology, but these are things that only underscore the problems with Sharlayan in the story. Like a lot of other things, they had older sidequest lines when the entirety of how they'd appear in the story wasn't yet finalized. You'll notice that the MSQ never brings up said assassins really, though Sylvestre gets a cameo or two for AST mains to gawk at.

A bigger problem with the world building is Garlemald not investing in a serious navy. Apparently they have one, and enough present to be raided constantly by Limsa pirates and to construct Castrums in the water, but apparently they just don't make use of it or enhance it enough with Magitek to make it noteworthy. In spite of stretching shore to shore, and having naval presence of some degree in both the Far East and Eorzea, we're expected to believe they only make aerial dreadnaughts. Trust and believe, if you could make something as large as the Gration fly as high as Azys Lla, you could make something even larger sail through the water. And why wouldn't they, what with vast Ceruleum reserves being known of in The New World? Why would they make all refueling points for airships landlocked? With such strong airships, why wouldn't they want something like an aircraft carrier?

I mean, keep in mind that Sharlayan isn't even as far away from Limsa Lominsa as Kugane was in Stormblood. There's no talk of a Ceruleum engine being used to go there faster, and we go there on a boat from Limsa within a short span of time. Then look at the region map and realize it's less far away from the mainland than Doma was from the imperial capital. Which Alphinaud and Maxima were going to fly straight from Doma to Garlemald in a simple dropship like the ones we shoot down in Castrum Meridianum(or used to anyway idr how it is now).

So just like Eorzea, it's not that the Empire couldn't go to Sharlayan and take it rather easily. It's just that they don't. This has been an ever present plot contrivance for a long time. Eorzea only ever deals with one legion at a time as far as we know. There's still like 5 or 6 legions that are completely unaccounted for within the story, too.

That said, as has been stated, there's not a lot to conquer with regards to Sharlayan. Though Gleaners roaming all around the world should probably raise questions about what exactly the Sharlayans are doing/need with everything they collect and bring back. Their islands don't appear to have any sort of strategic value to Garlemald's interests. Their citizenry wouldn't even make for very much in the way of conscripts either, save for their mages who would likely die fighting rather than serve. Simple pirates would be easily repelled. Their pacifistic nature doesn't lend them to the Ascians' plans either since you can't spark mass chaos with pacifism (of course, it means they don't get in the way, either).

Do gotta wonder though, why weren't the Ascians keeping an eye on them after Louisoix showed what they're capable of and what kind of knowledge they have at Carteneau? The man almost stopped a Calamity in its tracks. That should be of great interest to our old antagonists.