For the sort of game design I am thinking of for this topic, this is exactly the wrong assumption. I am thinking more along the lines of games like Ultima 1-3 and Dragon Quest 1, where much of the gameplay *does* revolve around killing the same enemies over and over again, and finite monsters wouldn't work for them.

(Also, for games with unconventional growth systems, like Final Fantasy 2, one can use exploits to get a lot from a single encounter; this could also be done in a game like Fire Emblem (which *does* have finite enemies, unlike FF2), which has limited enemies but you don't actually have to kill the enemy to get some XP, and some boss enemies are on terrain that heals them each turn.)

This is often not true, especially if it's not your first time playing the game, or if the game design is quite poor. For example:

Bard's Tale 1: The designer wants you to fight in town and level up before tackling the first dungeon; I just go straight into the second dungeon and have my Bard breathe fire on the group of 66 Skeletons.

Ultima 3 (NES): The game wants you to level up to get more hit points, but until it comes time to get a ship, it's best to not level up past level 2; when you reach level 3, stronger enemies start appearing on the overworld, and you can no longer kill everything with 0 MP spells. (Note that this is *very* different from how computer versions play out; in the DOS version, at least, I think dungeon first is actually the play there, since overworld enemies are scarce and food is in limited supply.)

Final Fantasy 2: The developers want you to stick to areas where the enemies are weak until later, but if you can manage to kill stronger enemies early (for example, by using Teleport on the guards in Fynn), you can get powerful equipment well before you're meant to have it. (Note that, unlike games with more conventional growth systems, in FF2 you don't get a huge bonus just from one out-of-depth victory.)

SaGa 1: I found that starting with a female character (as the first one you create) and selling her starting Saber (for 1030 kero) is the best play at the start. In a game where early enemies give only 40 kero each, having this money early on is quite helpful; you can then buy something like Punch from the second town, which grows stronger as you use it more, and by the time it runs out, you're past the poijt of fighting first world enemies and can easily buy better stuff and lots of human stats.

Final Fantasy 8 and Oblivion: The developers want you to play "normally" and level up, but these two games are much easier if you don't, due to out-of-control level scaling. (Sort of like that Ultima 3 (NES) example I mentioned.)

I just happen to enjoy this sort of discussion, having played RPGs for decades at this point.

In the case of Oblivion, just think of the damage you are doing to the global economy. How will all those bandits be able to afford glass armour if you don't press the level up button?

Like I said, no universal rule.

Your RPG examples are almost always JRPGs, which are an almost entirely different genre from Western RPGs. Since this is a PC focused site I bet most are more experienced with Western RPGs. Your post above about towns mostly being safe spots for example... not really at all the case, in older Western RPGs.

This is RPG Role Playing Game, so you should be immersed in the world and act - play a desired role in a game. Generally you should not make suicidal actions unless you wish to play a role of suicidal person (only one game comes to my mind that allowed this playstyle - Planescape: Torment).
In short unnecessary risking life of PC - in my opinion - should be avoided.

To be fair, JRPG conventions are based on early Western RPGs like Wizardy and first Ultimas. Though I agree that dtgreene does indeed "overnarrowing" own understanding of RPG genre.

On the sidenote, the game that fits the most to this topic description is Dark Souls (with bonefires replacing the hypothetical town).

It does happen to be the case in the Ultima series, for the most part. In general, in an Ultima town, you're not going to get into trouble unless you are actively looking for trouble (for example, if you go killing random townsfolk or stealing from shops), so the towns can be considered safe spaces. (Some exceptions do eventually crop up later in the series, like a couple monsters that attack in town in Ultima 4, or Ultima 5's guards demanding that you pay them or putting you under arrest, but those tend to be exceptions rather than the general rule.)

Also, if your idea of an older WRPG is Baldur's Gate, then I should point out that I consider that game rather modern by my standards; old school would be more like Pool of Radiance or early Might and Magic (if we're looking for games where towns are not safe, or at least not initially safe).

Also, in some early WRPGs (Bard's Tale for example), encounters in town can be compared to the early wilderness encounters of games like Dragon Quest and Final Fantasy.

Personally, I disagree; it can sometimes be rewarding to take a risk, and if things don't go well, reload.

(An example of this is in a game like Final Fantasy 2, where you might try to kill the guards in Fynn in order to get good treasure, but doing so early on is not easy and will result in character deaths (in a game where resurrection is practically free), and you risk a party wipe. Another example might be in Dragon Quest 1, if you try to get the legendary armor (which is incredibly useful) early; you might need some luck, but if you succeed, you get a powerful suit of armor that changes the game by giving you HP regen as you walk. The Bard's Tale 1 example I gave of going to the second dungeon right away is yet another example.)

A long time ago, I actually did make a topic where I made this particular observation, though I didn't limit it by era. For some reason, another user turned this into an argument, even though I wasn't making a value judgement about which is better game design (I happen to like the JRPG approach to this, though it's not a gamebreaker for me; there are other more important aspects, like the story/gameplay ratio (too much story makes the game less fun for me; it's one of the reasons I didn't liike Final Fantasy 7).

It's also worth noting that I am not afraid to criticize games that I love; the SaGa games that I've mentioned frequently, for example, are definitely not perfect. (There are even major flaws in many of them.)

In my opinion reloading is immersion breaking and should be avoided (that is why risking life should be avoided).

I believe there are two main approaches to the PRGs. One uses PC as a tool/vessel to explore the game (you are risking life, acting inconsistently just to explore the world as much as possible and finish as many quests as possible in one play trough).
The other centers on playing particular role with its limitations and keeping PC alive, as it is players alter ego in a game. Not doing unethical/criminal acts even if this would allow access to better equipment (if playing a "good"/"lawful" character) avoiding unnecessary risks in order to minimize re-loads but trying to achieve the goal of game at the same time.

Assuming either finite or infinite number of monsters, if the XP remain constant, there is no main difference tackling harder or easier enemies.
The difference is in how the system is built; but here we step into a huge field.

Without additional information, this discussion is not very deep nor bring anywhere.

XP given by monster could remain the same, but the XP needed for leveling could be exponential, logarithmic, linear, etc., changing the time spent harvesting these poor creatures.

It could be the case that, the more you encounter an enemy, the less XP you gain (even if never 0), while the XP to reach a level could be static or increase itself.

The XP for monsters could change due to bands of monsters mechanics or encounter difficulty based; not necessarily based on a single monster.

As other mentioned, you could have scaled monsters.

But then, depends on classes, skills, combat rules, etc.

From your initial description, I assume a D&D 1st approach. Very simple and linear.
In that case, based on class choice and rolled stats, you can need many a restart to survive 1st level.
And if you keep rolling 1 on hit points every level, even at 10th level, you are useless.

With the given information, neither.

However, if the player character is given information regarding what to expect in those areas via the means of NPCs, billboards or newspapers, then the answer would be more appealing. If by some way I learn that the creatures of the cave are vulnerable to light magic/spell/weapons (since they live mostly in the dark), and I have ways to get my hands on those early on, then I'd dive straight to the cave. Failing to do that, I'd go for the easy ways to learn the gameplay while developing my character.

I don't see the difference between the two options.

In any case I have to fight to level my characters up.
In what way does it matter, if that fighting takes place in the wilderness above ground, or in a dungeon beneath ground?

With no other data offered, I can only answer from the perspective of what might make more sense, in which case I'd say that, unless the dungeon is specifically a training place, maintained by that village for that purpose, then the wilderness immediately surrounding the village would make sense to be safer than a nearby actual dungeon, guards, local militia or what not clearing out any potential real threats and maybe just leaving little things that don't pose much of a threat and which may act as practice for beginning adventurers. And in a pure old-school RPG, fitting the kind of RPG definition you favor, of character attributes being the sole determining factor, such practice will be necessary before being able to tackle anything stronger. If there's any action element, on the other hand, allowing a reasonably skilled player to make up for the characters' failings early on (before the characters will reciprocate later), then the somewhat more difficult dungeon may be rewarding enough to be worth starting from there.