La Taberna de Eorzea - Rest In Pepperoni

As a recent game programming graduate I believe I can answer this question. FFXIV servers practices a Server Authoritative connection with all of its clients. This means that every single action you perform has to be sent to the server, the server then receives it, confirms the action, and then sends it back to every single client in that instance you're in, thus achieving the effect of the action being registered on your computer at the same time as everyone else's. Think of it as asking the server for permission before you can perform said action, so it actually takes a while before the actual action is performed, in this case, a fraction of a second.

Most games do not practice Server Authoritative connections for this exact reason, every action you perform will actually take much longer to perform. It's like playing with a constant latency of 0.2_0.3 seconds and while not all players are aware of it, it definitely feels sluggish and unresponsive.

Most online games gives the clients some authority when performing actions. For example, the dreaded CoD franchise. How many kill cams have you seen where the winner has actually shot his target dead on? I definitely haven't when I watch my brother play, they are always aiming and firing at the air in front of them. This is because when the victim of the last kill get's shot, that player has the authority of whether he was shot or not. If the bullet hit him on his "screen", he get's hurt/killed, and then reports that to the server, regardless of whether the winner landed the hit on the winner's screen. The winner doesn't have the authority to say he shot someone, but the loser has the authority to say they got shot. This is how they try and keep it fair. If the connection was server authoritative, then the winner would be able to accurately shoot at the enemy on his screen and land the shots without a hindrance, thus making the game appear more accurate, but with the heavy cost of 0.2_0.3 second lag (0.2_0.3 is just a guesstimate and the number varies with the servers and server routes), which as we all know CAN'T happen in CoD or kids will rage more than they do now about lag.

So that brings us to WHY even bother with Server Authoritative connections if it's so slow and unresponsive? Well for one simple reason, it's one of the best ways to prevent hacks and exploitations. If you try and hack the game and send to the server that your Fire IV just did 999,999 damage, the server is gonna be like "woah hold the fuck up no way you just did that" and deny you permission to perform that action. I personally haven't seen any actual hacks like infinite hp, mp, or damage, or being able to run at the speed of light, etc that you find in a lot of other mmos. The most I've seen are clipping issues.

And now to answer the question which you've probably been asking yourself, "If FFXIV is running a Server Authoritative connection, why am I not constantly experiencing a 0.2_0.3 second latency?" Well, the simple answer is, you actually are. The way FFXIV works around this is by granting you "pseudo" permission for every action you take. So the instant you cast Twin Fangs, or Bio, or whatever other instant cast effect or buff, you are NOT actually doing it just yet, because you are waiting on the server to receive your request to perform that action and grant you permission. However, as soon as you press the button your character is already beginning the animation for that action as if it's already been granted permission. This is what I call "pseudo" permission. You begin to perform the animation of an action immediately after pressing the button and always assume you will receive permission to do so, but in reality the permission doesn't come back form the server until fractions of a second later, and THAT is when the action is ACTUALLY performed, and everyone in that instance will have that action take effect on the boss at the SAME EXACT TIME, because when the server grants you permission to perform the action, it is also sending that information to everyone else in that instance, so it reaches everyone at the same time and thus the action "happens" at the same time for everyone.

This also helps explain why sometimes you "see" your character perform an action, when in reality it hasn't. Ever hit a Bio, SEE your GCDs go on cooldown, SEE the animation hit the boss, SEE the little flying debuff icon on the boss stating it has been just inflicted with Bio, only for all of that to roll back and all of a sudden it's as if it all never happened? That's precisely what happens when you experience a hiccup in your lag. You perform the action, and your character begins the animation because it assumes that it will receive permission, however after either a timeout or some sort of trigger, it realizes that it in fact did not receive permission to perform said action, either because you failed to send your request to the server, or it failed to send you the permission, aka LAG, and so your character will quickly stop the animation if it's still going, and act like it never tried to perform that action in the first place.

Edit: Sorry for the essay, I never learned how to explain things briefly, but I hope I've provided some insight for you as to why FFXIV can feel less responsive than other onlines games. Being an MMO with a high gcd of 1.8 - 2.5 seconds they can get away with a Server Authoritative connection, which is always ideal but will likely not be widely practiced until we receive the technology to cut down the time it takes to send something to a server and receive it back to <0.05 seconds without spending unreasonable amounts of money.