It can cause some blur and artefacting, but these are nowhere near as prominent or detrimental as the nasty in-your-face jaggies of no AA.
Well, that is subjective.
It is perfectly fine to prefer the the results of temporal AA and FXAA to a raw image.
I am not a fan of these methods, and that is fine too.
FXAA and temporal anti-aliasing does harm image quality, this is not really something that can be debated.
Players should always have options to tweak the game to their desired settings.
In the case of Xenoblade 2, I would either, do without AA or use SMAA (Or play on PC, if really given options).