D&D without the rules and themes of alignment is just a generic fantasy adventure game. 5E was already an example of taking simplification too far and diluting the interesting part of the game. BG3 is making the problem even worse, but those without any experience with the rule system will obviously not understand the consequences of these decisions. The younger audience here comes from a videogame background, and that makes sense since that is the demographic being marketed to.
I'm sure BG3 will still be a good game, but this is one area where it's a major departure from authentic D&D mechanics (which are the reason for its longevity).
I started playing D&D in a bygone millennium, when video games were played on an Atari. The alignment mechanic was silly then, and it is silly now.
There are essentially only three ways it can go.
- The DM (who in this case is Larian) can impose upon the players their own consequentialist or deontological ethics. If they decide that good and evil are evaluated according to consequentialist ethics, then it won't be very fun for deontological players, and vice versa. To one person capitalism is Chaotic Evil. Socialism seeks to replace the anarchy of unregulated markets with a structured, centrally controlled economy that will prevent the exploitation of the proletariat. So then Socialism is Lawful Good. Of course to another, it is Socialists who are Chaotic Evil. They are the ones who seek to rebel against existing laws and power structures, in order to stifle free exchange and impose tyrannical economic oppression that would destroy the proven efficiency of the Free Market. To them, those who obey the law and adhere to the Non-Aggression Principle are the Lawful Good characters. There is no room for such varied perspectives on good and evil with Alignment mechanics. If smite evil works on them, they are evil. Full stop. One can easily see why Larian (or any DM for that matter) would not want to be the arbiter of whether Donald Trump is Chaotic Evil or Lawful Good in a game that is supposed to be fun for everyone. Which leads us to the second option...
- Avoiding this uncomfortable situation by never addressing any moral quandary more ambiguous than whether to save that injured puppy or sacrifice it to Bhaal. Or my personal favorite...
- House rules to omit all that alignment nonsense from the game.
Not only do alignment mechanics kill any kind of nuanced approach to ethics and morality, but it isn't even internally consistent with the setting. Faerun has a pantheon, rather than a single deity. So it should stand to reason that for a paladin to smite with the power of their patron deity, they should be smiting according to the misalignment of the one they are smiting, rather than some universal complex plane of law/chaos/morality.
A character who chose to spare a repentant murderer from execution should get good points according to the doctrine of Eldath, but by thus subverting justice they should get evil points according to the doctrine of Tyr. If a paladin draws power from their patron, a paladin of Tyr should be able to smite those pacifists who seek to undermine justice at every turn, whereas a paladin of Eldath should be able to smite only as an immediate act of self-defense or defense of others. A single universal alignment mechanic makes no sense for a diverse pantheon of judges.
I am very new to tabletop DnD but regarding your last phrase...
Isn't that how alignment is supposed to work?
As I understood it - and bear with me as I am new to both CRPGs and DnD - alignment in video games sometimes (not always though) just kind of chooses what dialogue options you'll have available. Not exclusively limiting to the chosen alignment, and often with room for character development - but ex. if you're Neutral Good then you won't have that many dialogue options from the Evil spectrum. Obviously, the downsides and limitations of alignments in CRPGs is a lot more obvious when compared to the flexible pnp-RPing (where a DM is fully immersed in the particular story and thus, enable more RP options). Or at least so I thought?
As for tabletop (5e, since I have barely any knowledge and literally 0 experience with prior editions) - I just used my players alignment to somewhat grasp what kind of decisions they were making - I didn't care to bind them to anything, it was more so that I could vaguely write my story so it makes sense accordingly (no sense in trying to write a hero's story with tons of good aligned quests / side quests if everybody wants to play shades of evil etc). As for abilities granted by deities, I always had my players specifically chose (or that I, as a DM, chose for them, whichever makes sense from a RP perspective) a deity and their spell/action would just work accordingly.
Like you said - being endlessly merciful and benevolent might not be the answer to all good options, but that depends entirely on which deity the PC is channeling from. I kinda just assumed that this was a part of why one would have a DM - to create this living flexibility from alignments. Ex. my cleric is a follower of Lathander and whatever divine favors / disfavors he'll earn along the way is judged by my interpretations of Lathander's teachings - not some universal dilemmas.
As for the alignments themselves, on paper, I did not realize that they were supposed to be limiting in practice. I just had my players loosely chose an alignment in order to have something to lean back for roleplaying- with greater emphasis on lawful, neutral and chaotic than good, neutral and evil - and moreover, (like I mentioned) so that I have some kind of idea what kind of quests I can write for the story. In other words, I just use it as some kind of helping tool tip to stay in character(s).