Personally I think the biggest difference between Japanese Games (JRPGs and what-not) vs. Western Games is the fact that Japan has this other sort of BIG industry called the Anime industry on their side. And for most Japanese developers, the Anime industry has always been key influences in their story-telling style and development styles.
SquareEnix for example, even in the pixel art days (NES, SNES), has been influenced by Anime-styled characters.
(no coincidence that games like Chrono Trigger or Dragon Quest happens to be drawn by this famous Manga artist dude)
SquareEnix is obviously a very big sponsor in many Anime series, and they also have their own manga magazine.
(
GanGan Comics, where stuff like Soul Eater, Full Metal Alchemist, etc is/was published)
Obviously, Visual Novels have never hidden their relationship between the Anime industry either. (Art style, Voice Acting, etc)
And I think a lot of modern Japanese Games (story-driven games) are basically becoming a sub-culture of the Anime-side more than the Gaming-side, which is why a lot of western players are growing distant from them.
I kind of strongly noticed this playing FF13 (Japanese version), where there's a moment where Hope is mumbling in his sleep 母ちゃん(mother~), and Lightning replies 誰が母ちゃんだよ(who are you calling your mother), which is basically an inside joke because the Voice actress for Lightning (Sakamoto, Maaya) is actually the same voice actress as Aerith (FF7: Advent Children) and she pretty much says the same line to Cloud. And I thought to myself, man there's pretty much no way the English version is going to translate this inside joke properly.
And I feel there's a lot of these kind of subtle sub-culture references in many of modern Japanese games that just can't be enjoyed by most Western audiences, which I think is the biggest difference between the two worlds : P