Well, the point in a grind is to keep people busy long enough to roll out new content. Check Blizzard; they're not able to keep up with how quickly people mow through it, so they added arbitrary difficulty level hardmodes to their raids. It's just a matter of keeping people in the cycle long enough to get new stuff out. Removing one aspect of a grind means they have to rebalance it somewhere else.
I think thats what the devs nowadays use the strategy of adding grind to the games, but thats not how it started out from my perspective, back in the days of yore, the muds of old and the early days of asherons call, everquest and other games of that ilk.
Theres lots of reasons to have the game be grindy, but the main reason from my perspective is that some people will grind and grind so much as to hit max quickly. If this process is too short, then anyone can e it fast and you wont have an elite set of players who are more powerful than the newbies. This dynamic is key to players feeling like their work is worth something, if anyone can get it without much effort, then what is it really worth?
The only way I have ever seen an MMORPG have no real grind is on Roleplay type game worlds where killing mosters doesnt even gain you xp, or perhaps limited gain, and level caps are so low that all players are sort of equal to some degree. This is what we see on some of the best persistent worlds in Neverwinter Nights. You actually experience the world instead of fly through the quests as fast as you can to get at the carrot on the stick. Thing is, these persistent worls usually have about 30 players on at once, not hundreds or thousands. There are also usually DMs or GMs around who are crafting quests and possesing the NPCs to help the world breathe a bit.
For me, that what the dream of playing an MMORPG was for me when i first started way back when. I was never that, it was the grind. But I always wished the world felt alive and my actions mattered. Can that work on a large scale? I dont see why not, but nobody has done it. WoW rakes in millions, other games also do well. Surely, some of that money could go toward hiring talented story tellers to breathe life into the world. Imagine having the job of animating NPCs and throwing interesting twists and encounters at the players, weaving plots that the outcomes actually changed the shape of the world. Would be a fun job. I myself would pay more than the going $15/month for a well done version of that game.