It can be both dude, it doesn't have to be one or the other and frankly most of the game's cyberpunk elements are dropped once Midgard is over.
But we’re talking about Midgar being cyber/diesel/steampunk and not the rest of the game, so…
Except no one cares about the AVALANCHE vs Shin-Ra conflict once you leave Midgard
But we’re talking about Midgar being cyber/diesel/steampunk and not the rest of the game, so…

But seriously, of course not. AVALANCHE isn’t talked about, in, say, Mideel, because Midgar is half the world away. They don’t talk about the Mideel earthquake in Cosmo Canyon and they don’t talk about the rocket launch at the Gold Saucer.

Oh, and while I totally agree on Shinra being a better villain than Sephiroth,
I am dismissive because I completely disagree with you about the game doing an excellent job of establishing his threat because it doesn't.
Not in the slightest. Trail of blood is a smurfing incredible threat building scene, and there hasn’t been anything before or after it in a Final Fantasy game. Don’t give me the “Jenova did it (according to some fan theories)!” line. We don’t know enough about Sephiroth/Jenova at that point in the game to even make those theories. At that point, there is no doubt Sephiroth is responsible. Palmer straight up said he saw Sephiroth do it. Sephiroth’s sword – which Cloud states only he can use –is in the back of President Shinra. Nobody says “Oh, maybe it was that wacky old Jenova, better keep an eye out for her”

Oh, and, you know, giant honking great snake that you’ve just spent a lot of time being murdered by and then trying to avoid.

When I first played FFVII, I was scared of Sephiroth, scared of his threat, scared that hey, yeah, I’m chasing this guy but I’m not so sure I can catch him. A game’s never made me feel like that. The one thing they did perfectly with Sephiroth (and again, I stress I prefer Shinra as a villain to him) was making him feel like a threat.

Also why are you saying Midgard? Stop it at once. I can only just about tolerate Shin-Ra!