I don't think it was necessary in general, but it was probably necessary to continue onboarding new players at a rate similar to what the game has seen over the past four years. The last time a similar update in graphical performance was done was with Stormblood in 2017, a bit over six years ago, and it came with the conclusion of PS3 service, which had begun with ARR (despite 1.0 being promised as a PS3 console exclusive, the original dev team never published their version on PS3 as that version of the game required more than the PS3's hardware could provide.)

With the game now on PS5 and XBox Series, as well as considering the advance of PC technology over the past seven years, it was starting to show its age in a manner noticeable to new and old players alike, and not doing the update may have dissuaded some potential new players, those not yet invested due to the story or the community.

But hey, it doesn't have to be necessary to be an enjoyable boon for all of us, right?