Yes, a lot of Xianxia novel treats Dao differently as they use it to their own cosmology. Some have Dao that is weaker that the Real Life one, some are stronger and some are exactly the same.
In ErGen verse (the Author) he uses the one based on the real Daoism. Reasons are that every instance of Dao used in the novel is always a reference to a path, a way of the Universe and its characters. In Pursuing the Truth, Su Ming (the MC) has come from our Milky Way Galaxy, our blue planet, our Earth that uses the same Daoism.
In ISSTH every instance of Dao is treated exactly as our from Mythology or Religion. As characters try at every instance to comprehend the Dao as you can see it's insights increasing with each realm. As Dao is treated and used by everything in existence as the supreme enlightenment, a drop of water gained sentience and became a lake by grasping it. It even gave to Meng Hao insight regarding the Dao which is a concept that is affected by his mind framework. As long as he believes something is real, then real it is as concepts are created to describe, explain and capture reality as we know and understand it. In ISS, the Dao is about understanding your path, your way, your dream, the world itself and the way it works.
As it was shown in A Will Eternal, the Dao is at the beginning of all and the end of everything, it's the source of all that is, was or will be. Essence can take many forms and shapes but at its core, it's
the essence of them all.
In ISST, the
Essence is the origin and source of all things be them real or not. Like I said above is about enlightenment through comprehending the world and it's Dao.
You say that the Religion is not used, but then for a lot of verses you use the likes of that average mountain is 800km (example) then so it should be in the fiction verse but it's not for Xianxia verse where you have to say Great Mountain 1700km in China, in the verse is hundreds of thousand of kilometers. You say Taikyoku System but accept that it's the same as our verse of being the Supreme Ultimate. You treat it as the route and source of everything but then ignore the Essence used in ISSTH which is the same.
You again ignore the fact that in Daosource you can
create/destroy natural and magical laws as easy as breathing or how
a simple thought can become Essence.
Yes, the Xianxia is confusing and can or not use the same Daoism as our but in their verse is as real as possible for them.
Like the author compared the Realms of them
being like Dao.