"display all effects" actually means "all effect (that can fade out) will be transparent regardless of distance so you cannot see them"
How I found out this issue was because I had never saw some action VFX (such as Ilfoie meteor or Fomelgion beam) from other players, and suddenly after transferring from Windows Store to Steam (it had config reset) I could see them. I found that the difference between the settings is, on my Windows Store version, it is set to "display all effects" (and I couldn't see other players' VFX), and on Steam version set to "Only nearby effects" (and I can see VFX from other players if they are not right next to me).
I used JP client for comparison, and found the setting is actually "only fade out certain VFX from other players when nearby" vs "fade out all VFX (that can be faded out) from other players, regardless of distance". So fpr players that want to see more shiny beams, "Only nearby effects" is the option to use. There is no option that actually let the player to see all VFX regardless of distance.