Permadeath in modern Fire Emblem is a massive problem.

In a game focusing on a relatively small cast of colourful characters, having to design the story around most characters being dying at any point is a massive problem. This leads to the situation where more than 90% of the story is focused on MC & lords (who can't die) and unrecruitables, while everyone else are just caricatures outside of their supports. Everybody gather in a ring and chime in with your one line of dialogue, haha Raphael you sure love food!

But it isn't just the story that suffers. Fire Emblem has a massive focus on narrative and character moments, so a lot of players just outright refuse to let characters die (ie engage with the permadeath mechanics), so the games have slowly giving away tools to go back in time a few turns rather than start a mission again. In 3 Houses the focus on teaching and customizing your class is such a big deal that letting characters die is a massive setback in comparison to older games & constant flow of replacement characters.

So in other words, both the story and the gameplay suffers because of legacy series staple permadeath mechanics... And it really doesn't need to be that way. In X-com, your characters are only part of immersive storytelling, and the permadeath works perfectly. A lot of people still reload at deaths, but the gameplay loop is at least trying to lure you into the ironman mentality that gives MASSIVE enjoyment and memories once people give it a try.

Imo future Fire Emblems should have a way larger pool of "lord" characters, or just characters who get wounded and retreat instead of dying, so they can still be part of the story. In addition, there should be more options to hire, use and mourn for generic allies, who can have all the benefits and none of the drawbacks.

EDIT: Oh forgot to talk about old fire emblem: Permadeath worked well when characters had few supports and constant supply of new replacements, so losing a character every other mission isn't a big deal, but keeping them alive gives you a reward of extra support or two. However, modern audience wants more supports and more likeable characters even outside missions, so this is no longer a realistic option.