I get this, the first open area's where rock hard, i was frustrated to the point of quiting till i started to use terrain, i notice many areas had stumps, rocks, etc. like ti was made to be used for that. I know early game i backed into corners FAR TO OFTEN to make a fight manageable. So i cant say I don't understand why you didn't now, I can agree I disliked it early game. later game the swarms etc didn't really matter. I know i hated spell power to start but i seem to remember there was some stats that made some of this better. Dang was not expecting some actual reason's, I can see what you are saying..
That's the thing, backing into a corner was the only way to do things early on. Reducing the ways you could be flanked meant the enemies could only surround you like 270* instead of 360* which happened if you didn't use terrain. That didn't really help though. The enemies have you surrounded and your offensive spells are worthless. All you can do is cast minor buffs which didn't help much. So 1 guy attacks, camera spins to show monster two attacking PC 2, camera spins again to show PC 3 attacking monster 3, camera spins to show monster 5 attacking PC 5, repeat 10,000 times. And god forbid your best fighter dispatches his monster quickly, he can sit there the rest of the time doing nothing because there's no enemy directly in front of him that he can engage, you can't re-deploy, so he's wasted. Eventually you win, collect 50 EXP, 5 gold and you've wasted 15 minutes to get nowhere. It's just not fun.
PC games are a simple formula. Fight things, kill them, take their stuff, get more powerful, fight stronger things. Solve some puzzles, complete some quests. The end. Wizardry had that formula nailed, lots of puzzles and LOTS AND LOTS of combat. Pretty much every dungeon room and every wilderness clearing was a fight. In every other Wiz game, 1-7 I viewed combat as "Yeah!! Bring it on bitches!!!" and in 8 it was "Geesh, not this crap again". If the combat isn't good the game isn't good. And in Wiz 8 the combat sucked. The quests and puzzles were no great shakes either, but the combat broke the game.