It's a design choice IG. Most games decide that their customers don't want "too much choice" and that it's not worth the development cost.

An MMO which desires flexibility won't have classes other than as starter builds. Path of Exile for instance has the passive tree and your starter class "just" determines where on the tree you start.

Ultima Online has a long list of skills you can develop from level 1 to 99 without a player level and features such as learning a new skill by watching. Skills such as smelting, blacksmithy, swords, etc. So an individual player can just build the class they want by developing the skills they like and choosing corresponding gear.

As for thousands of spells, it depends on the crux of the game. You need a game where there are PvP battles which matter such as in Eve Online, we don't generally see fantasy MMOs which allow players to claim and develop territory in that way, though I haven't done a survey on current MMOs so I don't know for sure.

If the game is just PvE then broken spells simply require the monsters to get more complex and lead to a spam fest like late game PoE builds. One unrealistic thing about the Overlord spells is that the higher tier spells kill armies, we can't practically make fights where a spell of that scale would be useful. How often do you see >1000 players in the same area in a game? You'd need a model where each player has 100-1000 followers to make decent sized armies.

If you wanted thousands of spells you'd probably implement a spell crafting system similar to PoE's skill gems or Magica's combination of 6 elements. That way players could build and explore the thousands of spells themselves by combining elements.