I figure I'll chime in with how I understand it.
(SPOILER)
Sephiroth is a human. He's a really strong human, but he's still mortal and bound by the laws of physics and such.
The Sephiroth that you see throughout the game isn't actually the man Sephiroth. The real Sephiroth was cast into a Mako Reactor by Cloud. You do see him for a time when Cloud gives him the Huge Materia while at the North Crater.
The Sephiroth that kills President Shinra and all that is actually Jenova, posing as Sephiroth.






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