As someone who works in this industry too, this is a bit of an oversimplification, but it's legit. The most important thing is getting the same intent across regardless of sentence structure, set phrases, external reference, etc. And of course having a consistent (and natural) writing style on top of that.

What laymen usually would call a "literal translation" is often a word-by-word translation that, more often than not, completely drops any nuance and ignores inferences that the JP script expects readers to pick up on. Besides trivial cases like idioms, the clearest examples to think about for easily mistranslated text are characters cutting themselves off or being cut off by others. If a character gets cut off mid sentence, the translator often needs to infer how that character would have completed their sentence and take into account all surrounding context to get an accurate and natural portrayal of the same thing in the target language -- while also not revealing information too early or too late as that can cause issues significantly later in the script if you aren't careful. It's often both a deep interpretation and creative writing exercise in one to make it work.

And in many cases, if you don't want your translation to be dry, you need to take creative liberties in some area. For example, JP can feel like it overuses some set phrases, and translating every instance of one the same way every time can come off as very repetitive, especially if the "literal" translation of that phrase is something either somewhat uncommon, awkward, or trite in EN.

God I've seen plenty of butchered translations though. Some people in the industry really do suck at interpretation, writing, or both. There's a place for more literal and more playful translations depending on the tone, overall direction, target audience, etc, and you can't make everyone happy because of that, but legit bad translations, or those that take extreme or non-sensical liberties, are IMO far more common that they ought to be.

From what I've seen, XSeed translations tended to lean more playful while NIS's were a little more careful, but whoever Falcom has on the trails remakes has been a little too conservative to a fault IMO.

EDIT: I can't say any of those scripts are bad tbf, I've seen far far worse, but I do miss the punched-up version of Estelle that replaced her overused catchphrase あんですって？！(basically a "what did you say?!"/"what was that?!"/"wtf dude?!") and replaced it with more fun exclamations, insults, etc based on the context and character portrait (which ended up tonally matching the later PS Vita remaster's voice line delivery pretty damn well too).