>>1427The bulk of the sidequests in Xenoblade are something of an issue of being rather boring fetch/kill quests, but thankfully they can (and should) be done sparingly since you can easily out level the enemies and remove the challenge the game can have.
On the other hand, I do have to give Xenoblade credit in that with most quests you can turn them in while still in the field, removing some of the tedium that MMO-esque quests can have (though with fast travel it's not as big an issue as other games might have).
There are some sidequests in the game though that do build upon the history, the plot, and the people, and those were the ones I really appreciated. Did you do the pocketwatch sidequest for one of the women at Colony 9, for instance?
As far as how to make fetch quests enjoyable, I'd say either have a nice subplot/people/world building element to them as the big reward beyond exp, money, or equipment, and try not to force the player to go heavily out of their way just to get the items needed (IE: don't simply give the item a shitty drop rate from monsters or nodes simply to pad the time for it out, or force the player through a bunch of encounters simply to get the enemy the drops the item or needs to be killed to show up), but still encourage exploration as well (I think the landmark warp system and hidden areas in Xenoblade really helped with that). A good quest log is also quite useful, especially one with a marker for ones that will eventually be timed out the way Xenoblade does it.
I do hope that with XCX, they have the exp granted by sidequests be optional (maybe turned on or off in the options menu), so you can do them without fear of removing the challenge the game has by outleveling the content.