I reeeeally expected a delay, so I'll be quite impressed if it comes out this holiday season. Really, if it launches this will have been one of the strongest stretches of launch titles that I can remember from Nintendo.

why do people keep posting this? Nintendo just in the last week at E3 again confirmed the game would be releasing this Fall/Winter. Bear in mind at this point its obvious that they just need to polish things up. A few months is more than enough if it's simply details they're sorting out. 

If the grass is really your only point, that has to do with the change in approach.  It uses meshes instead of billboards.  They're probably still working on deciding the correct balance of density to draw distance, which is a very, very simple thing to adjust.  Honestly, the majority of the mesningful stuff seemed relatively final, mostly just polish.  Also keep in mind that just like with Zelda in its numerous videos and demos between E3 2016 and launch, the build seen here could easily be behind the actual build of the game.

What I saw was a game on the home stretch, without a doubt.

I dunno, it wasn't just grass, shadowmaps were also visibly drawing in very, very close to the player.

The E3 2014 build of XCX looked practically the same as the finished game as I recall, and that was 9 months out from release. Not that I think XB2 is necessarily that far out, mind you, but to me it didn't looked like a game that will be on shelves in less than six months.

It could possibly be an older build, yes, but at this point I still feel like if I had to break it down, I'd say 40% it comes out this year, 60% next year. Hopefully I'm wrong.

most probably tweakingthe graphics since the art-style is a mess. Cell shaded character in real life like environment.

They said in the treehouse that if E3 were in a few weeks rather than now they'd have full english voices and text rather than some Japanese text in their current build. That is well ahead where Xenoblade Chronicles X was at in 2014 (no localization at all yet.) 

Most of the things you are commenting on are paramaters in the engine that can be changed in a few seconds. The optimization process is the last process in development, where the game is polished for release. If this were a PC game it would already be going gold, because the developers would know PC gamers would tweak such values anyway. Over the months I expect them to get the right balance. If this game is delayed it won't be because it is unfinshed, but for some other reason. 

Setting grass and shadow draw distance further out might take the press of a button, but then there's optimising so that the framerate doesn't tank with the increased load.

And that's the other thing, even if the game is finished on time, they might push it back to early 2018 to avoid a Q1/2 game drought; Yoshi, Kirby, and Fire Emblem may not be ready until mid or later next year, leaving a hole that needs to be plugged.

Yeah, I don't see them delaying the game because they are unsatisfied with the shadows or draw distance. Nintendo wouldn't tolerate that. They have about three-four months to find the most optimized graphical state, and probably have a few people working on that. If the game is designed well none of this would affect game events (there won't be bugs to fix.) Since xeno games aren't the most interactive I don't see that being an issue. 

I think the second scenario is more likely, but Nintendo would have a holiday gap maybe since Super Mario Odyssey is releasing in late October. They might what a big November or December game to get those holiday sales. 

I was just reminiscing about how crazy it is that this game is getting a simulatenous release in all regions, considering what it took to get the original Xenoblade over. Imagine if that never happened? We might have not gotten XBCX or this at all, since Japanese sales for these titles aren't the best. 

They could push Mario Odyssey back to November and have that as their holiday game; let's be honest, that's much more of a Christmas tentpole than a niche JPRG anyway.

And yeah, we could owe this game's existence to Operation Rainfall in a way, which is pretty crazy.

They definitely won't delay Mario (they gave a clear date) and probably won't delay XC2 either. 

Yoshi and Kirby were demoed on Treehouse and looked very crisp and polished, these games certainly won't take another year to release. At least one of them will certainly release during the first semester. Btw, Nintendo Will definitely announce more games for the first semester between now and January. When will you learn and stop being pessimistic?