You're off, but not by much. A cutscene, for me, is a point at which your input ceases to serve to change the way that a situation progresses.

Define "engine".

The "engine" is where your input on the characters takes place. Say, an overworld map, a town, a battle screen, etc. To go back to the Celes and Cid scene, it takes place entirely in areas where you have the ability to move around and do actions. It is within a part of the game that you can interact with. So that's probably how I would define it.

So.... the cut scenes in FF4 (except for the FMV intro and outtro) would work too, since they all take place within those environments?

This is very true, it's a slippery slope. One that the industry is gaining momentum in. Think of it in a developer standpoint, there's only so much you can do with gameplay. You can do alot more with cutscenes. With gameplay, you're restricted with what your game allows, what the engine allows. But with the cutscenes, you can create CGI-cutscenes that allow you to show action better than the actual gameplay. Halo Wars is a prime example, you'll never be able to see some of the CGI-battles you see in the actual game play.

Probably, since I don't remember anything I would call a cutscene in the middle of that game. If there's a scene in particular, I can confirm it.

Compare



(after the battle with Edge's parents, naturally) to:



What is the effective difference?

Well, there are 2 differences that I see which distinguish the first from not being a cutscene while the second one is, though I don't know if one of them is mitigatable. The one I'm not sure about is the speed of the dialogue. If there is no way to speed it up, then it makes it a candidate for being a cutscene. However, what clearly defines it to me is the fact that the view of the second one is not the view of how you actually play the game. It takes me out of the game, to have a camera spin around, and effectively show off things. Since the entire game does not look like that, it becomes a cutscene, unlike the first one, which was entirely in place of where you can move.

...A camera change means it's no longer in-engine?

i agree cutscenes need to stay relatively short. we buy games to play not to watch

the camera change gives you a new perspective on the dialogue xD

but to answer your comparison i would have to say the voice acting, gave it emotion. the first one you would have to be reading it with your own emotion thrown into it. but i dont understand why you want to compare them, are you just trying to showcase how cutscenes used to be straight dialogue compared to addition of cgi / voice acting or is there more to it?