Minecraft isn't a problem at all, it's a sandbox game where it's implied you make your own fun. Depending on the levers you give the agents, it may or may not be a robotics problem, but it most of all depends on the task you give the agents. The task they were given in this case was pretty lame in my opinion ("build a civilization"), and it's no surprise they were bureaucratic and ineffective. It pretty much goes with the genre.

I'd imagine LLM could trivially write code that fights at least single opponent competently, and then just run it ?

It wrote scripts for fishing, should work just fine with combat

The human body has the ability to automate some muscular movements so the brain is out of the loop. Maybe these LLMs should be allowed to write in a small DSL that can trigger events out-of-band (something like "Oh fuck there's a spider, I'll set up a click spam loop and check in every 500ms").

Mineflayer does not strictly limit view distance, you just have to change the setting for it from the default value.

Get the LLMs playing GT:NH.

Use traditional game AI for the micro, LLMs for the macro