DMG page 48 Border Ethereal: Normally, creatures in the Border Ethereal can't attack creatures on the overlapped plane, and vice versa. A traveler on the Ethereal Plane is invisible and utterly silent to someone on the overlapped plane, and solid objects on the overlapped plane don't hamper the movement of a creature in the Border Ethereal The exceptions are certain magical effects (including anything made of magical force) and living beings."
If living beings are an explicit exception to the normal rules for etherealness, and can interact normally with ethereal creatures, then does that mean that living beings (but not constructs or undead beings) can grapple ethereal creatures, or can attack ethereal creatures with unarmed strikes? Could they in fact make any weapon attack?
Or alternatively is this passage only in respect to "hampering movement"?
Best Answer
I think it's indeed only in respect to hampering movement: "certain magical effects (including anything made of magical force) and living beings hamper the movement of a creature in the Border Ethereal".
I'd interpret this as follows:
I wouldn't consider a material creature's space difficult terrain for an ethereal creature to pass through. Ethereal and material creatures still can't touch, grapple, or physically attack one another except via force effects, so those opportunity attacks are going to be hard to exploit.
I suspect the RAI is solely to keep ethereal creatures playable on a grid. It'd be a real headache if they were constantly overlapping other creatures' squares, even if it's what ethereality logically enables.