okay so
here’s the breakdown of damage you take, damage you do, and XP and Money you gain in vanilla, non-Royal Persona 5
Merciless here was genuinely kind of a middle finger to the player’s time - combat itself was exactly as hard as hard mode, but you just got to grind a ton more because you only earned 40% the XP and money of any other standard difficulty. Most people who aren’t JRPG masochists didn’t really like this, and I think for good reason.
Well, ATLUS uh, mega over-corrected. Here’s that same chart for Persona 5 Royal:
Note that you now gain more XP and more money from battling than in Hard mode. This actually makes it quite easy to become over-leveled and over-equipped, which can make fights feel quite trivial. On paper, and from this image alone, it looks like that’s a trade-off for dropping from dealing only 80% of the damage you would deal on easier difficulties down to dealing only 65% of the damage you should be dealing, which to be honest would still probably be easier on the whole than Hard - but it gets worse!
Merciless in Royal also has one additional gamerule that matters a lot:
This works both ways - if you get hit for critical/technical/super-effective damage, you take triple damage, but you also deal triple damage when you hit a weakness, critical hit, or technical. Additionally, technicals in particular are way easier to actually inflict intentionally compared to vanilla Persona 5, and so in practice, since you’re almost always hitting a weakness and can pretty easily build for technicals or crits when you can’t, you’re actually dealing more like x1.95 damage and getting x1.2 XP and money for it.
This makes Merciless trivially easy - enemies basically melt as soon as you hit a weakness, and you level up way too fast to ever be in real danger past like the first miniboss of the game (and the first boss if you don’t get Media on Morgana beforehand). After that, the game is trivially easy on this difficulty, and you’d be better off just playing on Hard.
There are a few edge cases where Merciless is better later on, but on the whole Hard provides far and away the most well-balanced experience for people not new to JRPGs.