It really doesn't matter if you can deal tons of magical damage every turn with utility because your damage type is different from that of your teammates. You might deal 100 damage this turn, but only 10 really goes to the healthpool because the other 90 have to go through magic armour first.
With a hybrid comp of 2 magic 2 physicals, your enemies effective health pool is greatly increased because you have to burn through both physical and magical armour to kill them. Meanwhile, a comp like 3 physical 1 mage will only have to deal with physical armour on one character and the other two teammate can proceed to rekt the actual health for a kill.
I'm not sure if having a 3 physical 1 magic damager (or all physical damage party) will necessarily be advantageous for every fight in the whole game. Having all/most physical damage lets you focus down targets easier (especially mages), but I imagine certain enemies will be much tougher. The Dragon Knight has 600 magic armor and 200 physical armor or something like that -- I could easily imagine a group of enemies having 600 physical armor and 200 magic armor later in the game. I think a hybrid party with 1-2 magic damagers would deal with this fight much better than a full physical party because they could start CCing the enemies much sooner (nevermind the enemies being immune to knockdown), even if a focus firing all physical group might be able to take down individual enemies faster.
It is a bit weird that a raged staff user is pretty much the best magic damage in the game, though it does take intelligence to max the potential for that. I could see mages getting stronger as the game progresses as well as they gain more access to a variety of powerful spells, while warriors, rogues, and rangers only really have one tree to access.