Are we seriously pretending this is something new? For every Letho there was a Loredo, a Dethmold, a common bandit. Henselt was blatantly evil, the only grey morality came from whether now was the best time to make face justice. Not every single character in the Witcher franchise existed in the grey morality area. However to say Witcher 3 contains nothing on the level of Letho is blatantly false. The Bloody Baron is a far superior character to even Letho. Yennefer exists firmly in the morally grey area. Are we pretending these people no longer exist?
The OP made it clear that the problem is with one-dimensionality of the characters whom you perceive as evil. The whole evil concept is moralistic simplification of human behavior. The evil concept is primarily made for people who are not mature enough to make their own conclusions, for example children. Mature people won't say somebody's evil, they say that his person is selfish, greedy, arrogant, cruel, and so on. This is why the witcher 3 is the game for teens who still think in evil/good categories.
Is Loredo evil? Majority would argue that yes, but you can talk to him, argue with him, understand his motivations and reasoning. Even Loredo doesn't murder people just for fun, he has formal restraints, to start a pogrom of non-humans he needs casus belli to feel morally justified in his own eyes. This is very well written negative character.
Why is Henselt evil? Because he hangs Roach's friends conspirators who wanted to murder him? That's totally justified. He even spared Ves. Yes, it was in exchange for having sex with her and it's not something that makes him a paragon of virtue but, if you think about it, he could have still hang her after raping but he didn't do that. Is Henselt evil because he invaded a neighboring country when opportunity was present? Well, look in the history, only kings from fairy tales don't do that. Henselt was a very believable king with very clear logic in all his actions. You can justifiably not be a fan of him but Henselt is a very well written character.
Is Dethmold evil? It's a matter of perception, I don't see him particularly evil. He's not a nice guy, he's in the grey area.
Mentioning common bandits is not even valid because they don't have even remotely significant role in the game. Eredin is not a common bandit to give him less lines to speak than to common bandits.
Bloody Baron is well written character but he's a positive character, he repents all his sins (like in a fairy tale), and he's not the antagonist. Is he far superior because he's a "good guy"? I think they are both well written and claiming superiority of one over another is comparing apples and oranges.
Did you put Yennefer as a grey because she's good looking and she's Geralt's romantic interest? You put Dethmold in the "evil" bin, after all. Imagine that Yen doesn't know Geralt at all and is looking for her daughter, whom you have no idea about. Also, imagine that she, by some reason, decided not to alter herself magically and looks like 100 years old hunchback (this would have been her natural look without magical tricks). In this case, the game plot will look like this:
in the process of the game you learn that some unknown ugly witch stole the mask from Ermion and by using it created a storm that threatened to destroy the islands, then she killed the sacred grove when performing some murky necromantic rituals. Upon confronting her she would say that she doesn't care about what she did because she's looking for her daughter whatever it takes.
I'm pretty sure you'll brand her evil without a second thought.
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2. Second most annoying shift in the witcher 3 in the direction away from maturity is we no longer choosing the lesser evil, most choices are divided by clearly better vs clearly worse.
This is also false. There are many choices throughout the game that are not black and white. Do you save or kill the Tree Spirit? Do you lift the curse of Morvarg? Do you let the werewolf kill the sister of his dead wife? What seems simple to you may be hard for another. I never had a problem letting Roche kill Henselt, yet some people had a tough time with that choice. The sidequests are chock full of interesting three-dimensional characters, in addition to the main quests.
Why do you refer to the Ladies of the Woods example when the OP specifically states that it was a good part of the game?
Lifting a curse of Morvarg is not a lesser evil choice because there's no downside to lifting the curse. You lift the curse and kill the human Morvarg. You're unable to kill him if you won't lift the curse and Morvarg will be killing people if you won't get rid of him. It's a very good, paragon of virtue type of choice no matter how you look at it.
The werewolf example was also given in the OP as a good choice, why are you using it as a point against OP? I cannot argument here because I left werewolf be when the woman asked me to, so I have no idea who kill whom if you choose otherwise.
OP stated that the game has lesser evil type of decisions but too few of them. Most of the game has clear cut good vs bad choices.
Henselt choice was in TW2, not in TW3. It was a very good dilemma because it's a maturity check, which tests if the player can see beyond what's laying on the surface, to see if they can be responsible and see consequences. What would killing Henselt accomplish? Personal revenge, yes. Henselt is not a good guy for sure, but if you kill him you become responsible for so many other negative consequences like creating the succession crisis (aka civil war with many deaths of innocents in the process) and helping assassins and their not quite virtuous plans (you don't know them yet but you should take them into account if you're responsible person). This is why I never let Roche kill Henselt even though I don't like him not a bit as a person. The choice was quite hard the first time I ran into it. And this is why TW2 has more mature narrative than TW3.
