Are you talking about the chibi models vs. more realistic models? I think that was an artifact of an FF trope left over from the NES era where the world sprites were limited to one tile due to NES hardware limitations while the battle sprites were more detailed 1x2 tiles, and this was kept all the way up to FF6 where they finally used the same sprite for world and battles.

I have no clue why they went back to using different/less detailed models for world exploration in FF7 (if I had to guess they were unfamiliar with the PSX hardware and the chibi models used fewer polygons), but that go a long way to explain why the FMVs sometimes used different models--IIRC, the FMVs with chibi models played directly from the field, and the ones with more detailed models had some kind of scene transition into them, or otherwise were used for major plot beats. It's good they abandoned this entirely with FF8 onwards, though.