Technology in FFVIII is by no means "modern", "futuristic", or anything. Gardens, for example seem to use pretty old tech to get things moving, not electronic or digital at all. Yes, they have guns, but swords and melee weapons are still utilized and magic is just as potent, if not more, than anything else!

What you should know about fantasy is that it takes many forms, just look up the wikipedia page on all the subgenres for starters. They take many influences, from other fiction as well as real life, and put it together into something that could not exist in the real world.

Lastly, you should know that societies move in different directions based on decisions they've made as a culture. There's no such thing as a linear path for human civilization that is "optimal" or "rational". Efficiency and rationality are human fairy tales created to justify and defend a certain way of thinking. Societies in FFVIII could have decided that airplanes are ugly, or never pondered on or aspired to fly. They might have just liked sea, land, and...er... hover travel a lot more.

Just a couple things to think on.