I've played several RPGs, MMOs and MMORPGs including every edition of DnD, and they all have rules for combat, gear and seem superficially very similar. The fundamental difference is in the freedom given to the player.
- In an RPG every character is unique and has unique interactions with the world.
- In an MMO there are only a few types of characters and you can find thousands of virtually identical characters doing identical things.
You need rules and mechanics to make it a game, otherwise it's a story. But within those contraints I think it's important to give a player a lot of freedom and options. Not everything needs to be "balanced". But it's vital that you can easily make totally unique characters.
I think that's the essence of a good RPG.