I understand your point, but if you have no level-gating on the player or on his items (not much difference, because the end result is the different damage output), how would you give the player a sense of character/build progression, and specifically in an open world game, which *also* should be story-driven - how would you stop him from going into places where he shouldn't be for "story" reasons? I guess you could use stuff like "neighborhood lockdown" or other narrative-sourced helpers, but the end result is still gating.
My favorite approach is that of games like Pirates!, Battle Brothers, Mount & Blade - everything is open, you gain (or grind, depending on viewpoint) skills by performing the actions, and you get your ass kicked if you end up in the wrong place at the wrong time. I guess this would be described as "roguelike + saving", though I've never played Rogue itself. However the big downside of this approach is that you can't have a story that's too complex.