It's an optional fight and it is tied to the story that Phaleg is supposed to be this insanely strong character that's depicted as almost Saitama-like strength, just that you actually can beat her at the end.
In fact i'm an advocate for the lovely lady, so if anything I'd prefer if all other bosses did take a page out of her book and utterly annihilate you. But i do understand that is not entirely casual-friendly. I'm glad they made giga-frog kick people's butts at least, despite the fact that the actual boss isn't that hard, it just has strict rules.
I'd agree with the pacing complaints if beating her was required to progress the story, but it isn't so i think it's fine. Afterall you can go back and beat her when maxed out, now that the guardian is kind of literally unkillable and she can easily be defeated by most classes without even trying. (I'd dare say all classes, but then the TE mains will swarm me again)