I think there should be a balance between open world and plot driven.
For example, you have a wide open world to explore, but you can only go south because if you go somewhere else, you will know monsters are way too difficult. Because people grinding is something seen as both good and bad depending on the player, you should put sidequests that actually tells you a little bit more about the plot, or the characters' backstory and motivations. You know, like anime filler that actually makes sense.
That way you can level up your character and be more immersed into your story, and you're ready to go to higher grounds. Now, for people who loves to kill monsters and battle, you should put very elaborate dungeons and secrets and stuff in the more difficult areas, as an incentive to explore and be stronger.
And to avoid bosses being overpowered or underpowered, each should require a different strategy (for the immersive player), or enough HP to actually be difficult to button mash (for the offensive player)
In conclusion, get the best of both worlds