As far as the two suspensions of disbelief meeting in the middle, one simply has to look at Final Fantasy XIV's laws of physics and combat to find what is and isn't possible. And that is..that it's inconsistent. We often see massive feats of strength and magic, and not just form the WoL, but from many individuals. The fact is, the game is cinematic, anime-styled, and very very Japanese. Thancred does a lot of high flying acrobatic stuff, people fling fire from their fingers, we have an empire that's kind of like the Empire from Star Wars lite version mixed with the Gestahl Empire from FFVI. But we also see those sometimes superhumans beaten when they shouldn't be, or not using that strength or magic at certain intervals when it would be useful to advance the plot along. As far as Godmodding. Well, it's fairly cut and dry. What was described by the OP is more about 'style' than 'godmodding'. Someone prefers to disregard all the anime style fighting the game presents is entirely feasible by lore because they're not comfortable with it. Another does use it because it has precedent. That's up to them to figure out in method and flow. That's clashing styles. It just requires compromise, or the ability to recognize compromise isn't possible.
Godmodding is a lot easier to deal with. If my character casts a spell to drop a meteor on your head without any way of disengaging from the attack, forcing your character to take the entire hit, that's godmodding. If he casts a spell to drop a meteor on your head but leaves several avenues of escape that still might result in you getting some burns or scrapes or damage, that's more feasible. Yes, you can dodge a spell, a sword, a bullet, what have you, but it's important to remember you can't dodge *all* the time. That's the tricky part about godmodding, at least in combat. You have the right to avoid an attack and not have the *full* effect forced on you. However, dodging all the time to *no* effect against you is as equally godmoddy. It's fine to fully dodge some of the time, because if you didn't, fights would be over way too fast. There's an example in the MSQ of a protect type effect completely nullifying (What I assume at least) the impact of a normal bullet. Ultimately, in a battle, we should expect our attacks to have some effect on the other individual, without the end result being written for them, by us. Barriers should have a number of hits allowed, or a precentage of damage allowed in, based on the scale of the attack, and so on.
What it comes down to is, use good judgment, and all shall be well. Don't write people's responses or damage for them. Let them answer creatively and have both sides expect acknowledgment of effects from attacks on either side, otherwise it's not a battle. Godmodding out of combat is a no no as well. If you're pickpocketing someone, they have a chance to notice. Don't just do something and call it law without giving them a chance to respond. The story has many writers, after all. Otherwise, why interact at all?
Godmodding is a lot easier to deal with. If my character casts a spell to drop a meteor on your head without any way of disengaging from the attack, forcing your character to take the entire hit, that's godmodding. If he casts a spell to drop a meteor on your head but leaves several avenues of escape that still might result in you getting some burns or scrapes or damage, that's more feasible. Yes, you can dodge a spell, a sword, a bullet, what have you, but it's important to remember you can't dodge *all* the time. That's the tricky part about godmodding, at least in combat. You have the right to avoid an attack and not have the *full* effect forced on you. However, dodging all the time to *no* effect against you is as equally godmoddy. It's fine to fully dodge some of the time, because if you didn't, fights would be over way too fast. There's an example in the MSQ of a protect type effect completely nullifying (What I assume at least) the impact of a normal bullet. Ultimately, in a battle, we should expect our attacks to have some effect on the other individual, without the end result being written for them, by us. Barriers should have a number of hits allowed, or a precentage of damage allowed in, based on the scale of the attack, and so on.
What it comes down to is, use good judgment, and all shall be well. Don't write people's responses or damage for them. Let them answer creatively and have both sides expect acknowledgment of effects from attacks on either side, otherwise it's not a battle. Godmodding out of combat is a no no as well. If you're pickpocketing someone, they have a chance to notice. Don't just do something and call it law without giving them a chance to respond. The story has many writers, after all. Otherwise, why interact at all?