Ask different people and you'll probably get different answers. This is my take on it as a man. This inadvertently turned into a wall of text, so bear with me.
1. Yes it can, and perhaps. An important thing to remember though is outside of very small indie games, video games are a collaborative effort. It's easy to think of game directors as auteurs who shape games by themselves, but it takes a lot of people and they may not all agree on how it's handled. And even if they're in control of the studio, the publisher and marketing department hold significant sway so I don't think the "self expression/creative vision" argument is a very good one outside of tiny indie teams and even then that's not a shield against criticism. People often talk about realism in these discussions, but something like
verisimilitude may be a better word. It's a small distinction, but too often, simply because something is fantasy or has fantastical elements and is thus "unrealistic" that means the sky is the limit. You can add anything "unrealistic" and it won't negatively impact the media because it's already unrealistic. In truth we accept these fantastical elements, but there's almost always a sort of logic that runs through the setting and we form an idea of how this fictional universe functions. When it has parallels to our own world we're inclined to assume certain things based on how our world functions.
So let's say we have a fantasy world where the character wear medieval styled armor, but with impractical spikes and cool extra bits.
Ok. The fantasy characters in this world are all apparently superhuman and survive just as easily in the harsh desert as the frozen arctic.
Cool. They are repeatedly stabbed, bitten, immolated, and even survived the solar system being destroyed several times in that one boss battle.
Neat. All the men wear full plate, studded leather armor from neck to toe, or full length robes and pointy hats.
Seems fair. All the women wear metal bikinis, fur bras, or form fitting dresses with cleavage window and high cut leg slit.
Wait what? The first ones are fine despite them all being unrealistic because we know what climates people live in and how durable people are and we've suspended our disbelief out of enjoyment for the gameplay or narrative. The last one is a head scratcher because we know how men and women dress in the modern day and historically. It doesn't jive with any of what we know and I've yet to see a setting that did this and explained it to my satisfaction. That right there is the typical realism argument and personal preference can play a role in each individual persons interpretation of what works and what doesn't.
2. The major issue is the ubiquity in media and specifically video games since this is a game forum. Women are frequently sexualized in all forms of media and too often they are objectified. So women portrayed in games usually aren't just sexual, they're treated as the lessers of the male characters who often take center stage. They're damsels in distress, wives who exist to die and fuel the husband's anger, or simply window dressing at a shop or on the hood of a car. This is problematic because these attitudes leak into society in subtle ways. Life inspires art and art informs our lives. Not to mention games, which are often escapist fantasy, don't work if you're seeing the same objectification you experience in your own life. As for how to deal with this, opinions differ. I think most people would stick me in the prude category and I'd say overall we need less sexualized depictions of women. Because I know not all developers are open to that I'd say don't objectify women if you still want to have some sexy women in your game. Try to properly incorporate them and give them agency, make the player feel that the character dressed themselves, not a character designer making what personally gets him going. For games that sexualize their female characters because that's why the director made it and it's the whole point of the game (ie Senran Kagura) consider adding some sexualized men. And don't just slap them in a speedo and laugh it off. Slow pan over their ass, oil them up, have the other characters (and not just a camp gay dude) comment on how hot they are. Whatever they've got to do to make it sexy. I feel like too often when developers (specifically Japanese developers) sexualize male characters they try to make it silly or zany, all too often with a twinge of homophobia. And that's not really sexualizing a character, it's pretending they're the same while treating them differently. I'd feel less strongly about metal bikinis if they magnetically attracted arrows and bullets.
Also, importantly, not all women dislike sexualized female characters. From what I've read in threads like this (not trying to speak for the women in this thread, please chime in!) Most seem to be bothered by how pervasive it is and how poorly it is handled. Some enjoy sexy ladies (regardless of their orientation), but have issues due to how it's commonly handled. And of course women aren't a hivemind who all share the same opinion. But it's definitely worth listening to women in these kinds of debates and maybe giving their words a little extra consideration because they have to deal with issues of sexual harassment and objectification in their lives which gives them a different perspective than most men.
Anyways, my personal opinion is we still need to go a ways with the depiction of women in games and the easiest path there is less sexualization. If things start to even out and we can get evidence that women are being treated more equitably and fewer are put off in the gaming sphere that opens the door in my eyes to more sexualized, but well portrayed characters in mainstream gaming. And then maybe we can get some equal opportunity sexualization. I lay out my thoughts like this because sometimes people will suggest we just do sexualization better or do sexualize both men and women, but due to the factors I laid out I think it needs to be a process. Of course how exactly it should be done is just my opinion and the idea of "how" is an excellent one to debate. And the most important takeaway from all this is pretty much all of us arguing in favor of more progressive representations aren't trying to force a change down people's throats, we're trying to change minds. We're trying to get players and developers to see that this is a perspective worth considering. Bring up the issue with other people who enjoy the same games as you, but consider its possible to bring in more fans if women are portrayed differently. Bring it up during a Q&A session with a developer. Hope a budding game designer on ResetEra sees this and takes it to heart.
It's not about censorship, but getting people to see games can have new fans and a better fanbase if we change how women are portrayed by perhaps dressing them better where swimsuits don't fit, writing them to be more important and more fully fleshed out characters in general, or at least throwing a bone to the ladies and gay men who game with some actually sexualized men. It doesn't mean anyone is a bad person for playing games with objectified women in them or for liking sexy women. Just understand how it shapes our cultural perception of women, how it can push women away from gaming, and how games in general can be better by being more inclusive and having generally better characters.