MK was always very selective when it came to realism. Gallons of blood lost, a pierced skull, a broken spine, but no biggie, everyone continues fighting like it's nothing. Damage on suits/bodies might be the one realistic thing, but only until we have Kabal with a torn breathing tube, ignoring it and adjusting his mask to visibly inhale a quick breath between rounds anyway... despite the mask no longer being there on top of it.
Also it's subjective, but I usually found the visible damage way overdone. A couple of blunt kicks to the opponent leg and suddenly his thigh has a big chunk of flesh torn out and an exposed bone. All that being said, in the end not realism but rule of cool appears to be the priority, and what's cool is a matter of personal taste and preference.
The way I see it, if you want characters mutilated, that's what fatalities are for, blood splashes on the suit are enough for the match proper. However, body/suit damage is a feature some people liked, I'm sure. If it had an on/off trigger in main menu, it would be all I ask for.