Sure, but I don't think they must be mutually exclusive; on the contrary: in the late stages when your character is a tank, swarms of minions that posed a challenge in early stages become just a nuisance, mostly. You are walking legend slaying dragons for breakfast, everybody and their dog knows about your invincibility … but instead of giving you some respect, they try to bite your heels on the first sight. I guess the "fun aspect" of seeing them flee and not restraining your movement at all could be slightly more satisfying than taking them down in a single hit one-by-one for the thousand time.
Some games did that(in part).
The original Gothic for example. When you were high level, other low level NPC would rather run.
I also thought hard about the concept, how to make FPS games still fun, but a bit more realistic. The thing is, in most settings this means reducing lots of enemies - as realistic would be, once you start shooting, they all come for you. Not 3. And then maybe another 2. And so on.. and then you would not have a chance, unless you get special powers (or quick save and quick load part of the mechanics)
Similarly, a mindless swarm doesn't present much opportunity for tactics, compared to a group with individual self-preservation instincts, and a manipulatable group morale level, or individual fear level mechanisms. On the other hand it's true that realism is not the goal. Reality is no fun, that's why we're playing a game. But it's a sort of distorted echo of reality, I suppose.
I see somebody in another comment complaining that enemies who get frightened rob the player of the fun of battles. So it depends what it's all about.
"Man, after I finished the main quest and slayed ther Dragon God(TM), nothing has attacked me for days. I guess I'll start a farm."
> I guess the "fun aspect" of seeing them flee and not restraining your movement at all could be slightly more satisfying than taking them down in a single hit one-by-one for the thousand time.
Chasing enemies is much more annoying than them coming to you, so that would be a punishment to the player.
Players don't like when you punish them in that way, they want to kill the monsters they don't want an upgrade that makes you more powerful make it harder to kill monsters since now they start running.
Other than the meta-answer that the game designers made it that way, or that you may need to farm kills for something in future, there is also the Zerg Rush answer: some creatures are literally bred to swarm their enemies, that's how the hive has always survived before. It doesn't matter how outmatched they are, provided every needling damages you at least a little bit.
It's not unknown in human warfare either:
https://en.wikipedia.org/wiki/Human_wave_attack#Use
There's a similar human need to protect what is precious. Defending your family, defending your motherland. Cities being seiged by a superior opponent don't just abandon the city in cowardice, because they know the opponent will just gain ground and still come after them. They don't want to, they'd rather you stopped, but they have to defend their territories, even if it means their annihilation. If you win, everyone gets killed, ravaged, enslaved, ... If they only have sticks, and you have missiles and jets... they have to use sticks. Can you imagine how they feel?
But yes, you're probably thinking of RPGs where the enemies are preprogrammed with the same hostility no matter what the circumstances, even if you're a God-killer and they're defending 5 coins and half-eaten sandwich in their den.