It's not limitless, and that makes all the difference. The cap still there. It's the exactly same things as extra levels, but measured differently. You can balance how powerfull a fully geared player will be compared to a recent level capped player, and in some way how much time a player will need to spend to achieve a fully geared character. All MMO's will try to keep you playing by trying to grind some shit, what we actually already pointed out, achievements, fake achievements, gear, cosmetics, and the list goes on. But which one give you the option to limitless grind power?
I agree with you in this points, those things are present and limit Tibia/OTServ design a lot by themselves. But I still do think limitless numbers constrict it even more. Some exemples:
#1 Damage over time in Tibia is irrelevant. And that won't change ever. Players overlevel the content to places where theirs instant damage is too relevant, since it's more efficient to exp, profit or both. Nowadays it's too fast-paced for damage over times mechanics, but oldschool was slow-paced and DoTs was still irrelevant by the reason I gave.
#2 Your damage formulas have to scale well for every level, hence you can't implement mechanics/formulas that aren't scalable. And more, classes have to have same power when facing content of different difficult. As if a class do damage by doing several fast small hits and other have spiked damage by cooldowns, the one that deliver spiked damage will have an absurd advantage when farm the content while overleveld, they both drop the same damage over time, but spiked damage dude can one shot shit, hence he can starting moving faster (while cooldowns come back) and take less damage by simple fighting faster. Solution? Standardization of classes.
#3 Maybe not a problem only by the game having no level cap but also by being too fast-paced (which is forced by not having a level cap, because of overlevel, efficiency and bla bla bla). But you have no space for silences/slows/stuns/knockbacks and those kind of things, that could be used differentiate classes. You just drop your damage and collect loot, if any of this mechanics are present they would be abusable/overpowered by the difference of character power and content difficulty. Look at Paralyze, it's soo retarded that the manacost is prohibitive and you can't use it at all in PvE, it's impossible to balance with players varying so hard in level/damage/etc (even movespeed

).
It's a matter of the content the player will play to grab exp or profit is where he can kill monsters fast. If you add gimmiks to differentiate classes, that aren't relevant to kill monsters fast, they will search content where they can ignore them and just kill things fast. You can't create other differences also (damage/formula), because classes have to be balanced by level when they face content in a wide range of difficulty.
Look at the problem I'm facing when balancing my
server concept (not directly the same thing, but related nonetheless). I have to balance the profit from killing monsters with the cost of SD rune. Knights don't have access to it, and mages do much more damage with SDs then paladins, hence they are meant to be special, and not spammable, so players can't profit while hunting with SDs, else mages are too much powerful and the go to classes, imbalanced, overpowered. I grab players from level 100, how much they spend to kill monster x, how much they profit, adjust SD costs accordingly. Players reach level 150, his SD does more damage, his actually profiting, he buys SDs nonstop and is spamming SDs, he's reaching higher levels faster and having even more profit, knights and paladins can't compete. I adjust the costs for level 150 players, and now its totally prohibitive for level 80 players, they can't even cross the barrier of collecting enough runes to make a avarage hunt of 1-2hours. It's a unsolvable problem, unless I make inumerous other changes and overrule the entire proposal (I still can't see a solution though).
Look what CipSoft did (since what I described was the game state at 7.72 +-). They make resources spammable for all classes, they drop same kind of damage in a similar way, you profit hunting easily, so you can fill up resources with no downtime (in comparison as how it was in oldschool, where you spent a lot of time trying to buy runes and manasitting). Gameplay is the same at all levels, classes does nearby the samething, you get profit everywhere, things die easily.