For the most part, i agree with the idea of overdeveloping the character design thing to the point where the designer's boss should more often just turn to him and go "uh... no, guess again." I got a little confused though with the Final Fantasy reference to over designing characters. If someone could shed some light on that for me, because I really cant think of any examples besides that retarded cousin FFX-2 which I couldn't force myself to play through and perhaps a character and an NPC or two in FF12 just for too much wardrobe.
ABOUT: "At the end of the blade is a little cut widening into a circular gap about eleven inches up", its for the "penis look".Seriously the swords in Dark.. are not just phallic symbols they are penis replicas I mean look at the last sword it has penises drawn on it. I mean look at them. They are not random they are not luck they are intensio-something my English are not good I blame the retard behind me in English class
-HOPE TO REACH OUT.
Looking through the pages of comments, it's sad that many don't see where you're driving at. It's sad to see how few people appreciate good game design nowadays...
In games, character design has to fulfill accommodate for several things:
 The Silhouette.
With games like DMC and Bayonetta, I'd agree that the characters' tastes are misguided. But game design-wise, they are good. Simply by their shape, color, or the way they move, at a glance you know which enemy to dodge, which to harass, even with literally twenty enemies on-screen.
With a role-based multiplayer, TF2 did great on that aspect. At any distance, you can recognize the player's class. That equates to got better situational awareness, and you being able to adjust your strategy accordingly. (BTW, take on the Sniper.) Same with a well-designed RTS game. You should be able to recognize the units without having to memorize a FAQ sheet for two weeks straight.
 The Lore.
For those who kept on arguing on fantasy and suspension of disbelief, you've got good points. But also keep in mind, with well-written fantasy, they give you enough information about the WORLD. What's the scope of technology? What kind of magic exists? Is there a Santa Claus? If the game has enough time to give you a background story about the character's wardrobe malfunction, well and good. If you have to piece together these as you play, it's a bit more difficult to do so.
 The Function.
The character design is not for the character itself, but for the PLAYER. In single-player games, your avatar reflects your expectations of what it can do. If you have a skinny guy in a jumpsuit you'd expect him to be able to outrun a kid on a bicycle, and probably take off on a parachute with no prior warning. If you have a hero with a patchwork armor fetish you'd expect him to collect random trinkets off enemies, and possibly raid a castle's battlements for metal polish.
For MMOs, it's less of functionality per se and more about status. A more elaborate piece of armor means you're e-penis is bigger than anyone else's. Simple as that.
Yahtzee, I'm proud of what you're doing. I just hope more people can see you as a proper game designer/ game critic and not a senile old man rambling on how bad games have become.
The best character design I've seen is in Final Fantasy IX. It's fairly different from most jrpgs. Each character is very distinctive, almost as though drawn by a different artist. The only character who suffers from the typical fetish shop crash style is the villain, and he's an eccentric aristocrat.