This show is one of my favorites, because it is funny as hell. I don't see what the fuss is about with them not using their avatars, because that really isn't the main focus of the show. The relationships between the characters is. It can be kinda random, but I have never laughed so hard at any other show other than maybe Desert Punk. The people who think my bride is a mermaid can hold a candle to baka and test....*sigh*
Anyway they can only use their avatars within a designated area because it must be supervised by a teacher, thats the point. Which, as you may have guessed if you've watched a few eps, really has little to do with the plot of the show.
Take it or leave it.