By your explanation then why does fantasy not have wizards just running rampant casting the most powerful things they have then?
There is an underlying universal concept as to why wizards can wield great power, but don't use it, and that is where the problem lies in thinking they can just use it all the time.
What good would a story be if a wizard just lobs the most powerful spells at anything?
There ARE storylines in which wizards just run rampant and/or tell you why they don't. The concepts are not universal and vary
greatly from storyteller to storyteller.
In Terry Brooks'
Shannara books, the use of magic is potentially a corrupting force, and the more you use, the more probable and deeper the corruption.
In some Eastern legends, magic- certain evil magics, anyway- can age the caster. A classic example of this appears in the Sinbad movies, in which Tom Baker's wizard ages with each spell he casts.
Niven's
Magic Goes Away stories are set in a world in which the great mages of the world simply exhausted the world's mana because they didn't realize it was a finite resource. (You may recognize that as one inspiration for TSR's DarkSun setting.) However, when a source of mana is found, the ONLY limit to the use of power is the amount of power available and your skill in its manipulation.
In some legends, like that of Atlantis, the wizards cast magic freely until they offended the gods with their displays of power, and were struck down. In other legends, its not the gods who strike down the wizards, but arcanovoric and/or soul-eating beings to whom the casting of magic is a dinner bell ringing loudly. The "louder you ring," the quicker they come running.
In the Eternal Champion stories, at least
some magic practitioners are limited by the pacts they have made with otherworldly supernatural beings. Those who have the oldest pacts get the best deals- the Johnny-come-latelies of the magic world often find the majority of the benefit of the pact goes to the supernatural being, not the caster.
Some books feature mages of unimaginable power. They rule the world, but they are rare. This is partly because the path to arcane knowledge is difficult (or in some cases, available only to those with an innate talent for it), but it is also because many of their lesser rivals were killed off by mundanes who feared their power and what they could become. Or
they've killed off their lesser rivals.
In many magical traditions, there isn't even really the concept of combat magic such as is used in FRPGs- there is only Ritual Magic. Certainly, such mages can use magic to harm or heal, but it takes them time- more time than is available in a combat zone. In those stories,
fast harmful magics are the exclusive purview of potions, wands, staves and other physical artifacts. A "modern" take on this can be found in Harry Turtledove's
Darkness novels. Mages-
even that world's equivalents of Gandalf or Merlin- can cast almost no directly harmful or helpful magic with any real speed. Such magic requires long, difficult rituals. Instead, magical energy is trapped in devices that can be triggered by anyone trained in their use. The great magics, however, are still limited to rituals. Still, that means that one of the only real limiting factors is time.
Even humorous writers get into it- the wizards of Terry Pratchett's
Diskworld don't use magic for everything because its often easier to do something the mundane way than to use magic. They save magic for the BIG problems of the day.
Tim the Enchanter casts fireballs all day long.