Tvrkm
As the author you define the system. I would define the system separate from the story. Much like a character, make a sheet that explains the rules and how it works. If you are consistent, your system can be anything.
I’m not familiar with cultivation, but I have written stories with magic. Here are some of the things I write down when making a magic story:
Are people elementalists? Do they all have different magic types? Is magic for combat, non combat, or both?
Words, wands, hand motions, dances, rituals, there are a lot of what’s to cast a spell in fiction.
Spells need some kind of limitation, in my opinion. This can be mana that mages have, physical energy that is drained from the spell, or some kind of stone/material that is consumed when casting the spell.
Worlds work the same way! You want to write down all of the important details of your world before you start writing. Everything that happens in the world should follow the rules you make up for it. For example, what is the government? Does this realm have a king? Is the queen more important in this world? Or is there a council that runs the world with three people on it? Up to you, but you should know how their government works if that’s important to the story.
As for making the MC overpowered, I actually think this is easier to avoid than people think. Just make him relatable and have conflicts for him to be a good character. I’ve never seen one punch man, but I believe it is about a relatable character that is so overpowered he is bored. This creates a different kind of conflict; however, it’s still interesting from a narrative perspective that being said, here are some ways to not make the MC overpowered:
One way to make the MC balanced is to make every character overpowered! If the MC can blow up a mountain with his mind, then make the villain able to create mountains with a wave of his hand. As long as the relative strengths are equal, you can make them as strong as you want. This can reach a point where it is crazy though.
Another way is to put a high price on strong powers. An example that comes to mind is an Anime where there is a mage that can use high powered explosion magic. The issue is that it uses all of her mana to shoot one explosion. After she does it one, she collapses and can’t move for a few hours. Her magic can only be cast once a day as well. Maybe your MC has a similar issue.
Perhaps you want to have your MC be the strongest character around with no physical weaknesses. That is fine, give them a mental weakness. Maybe they see hallucinations or are afraid of blood. It could also be a self imposed restriction like that they will never kill someone. Heck, you could make a character that has unlimited power but lacks control of it. Hard to fire a massive fire ball when you don’t know where it is going...
Hope this helps.