You're not the only person with that opinion. Aside from diverting players from Dungeons it also makes Leves completely useless. Another effect is that sheer amount of undergeared and (real) party-unexperienced players that can't function normally in the easiest of dungeons.

Weren't FATEs originally thought to be a nice surprise for when you're in the area by chance? Either the frequency of FATEs should be lowered or the experience reward should be cut to a more reasonable value.