boils down to simply knowing what to do in a given situation.

Can he blast enemies out of existence with magic? Maybe some weak ones, but most he has to stick with a sword, just like everyone else. Your example indicated what he isn't capable of doing: blasting 88 goblins. Nor can he blast Nazgul, or trolls, or the Great Goblin, or wargs.

Is he immune to injury? No, his physical form can be injured or killed with a weapon just like a mortal. He can be sent back if the Valar choose, but he will need a new body and it takes some time to recover.

Does he have superhuman strength? Can he fly? Can he teleport? Can he move at superhuman speed? Can he turn invisible? is he incorruptible? No to all of these.

Even a Maia at full power, augmented by the ring of power, can be defeated by a mortal (Isuldur, and that's not the only time mortals and elves defeat Maia in combat).

And, the Istari are further limited by the physical forms they inhabit. Gandalf the White is more powerful than Gandalf the Grey. It's the same Maia, so the power level must be tied to the physical form.

And then he has "rules of engagement", to use a modern military term, which limit what he is allowed to do.

To summarise:

1) Maia are far from omnipotent, and can be defeated by mortals.

2) Istari are further limited by the form they inhabit.

3) They are limited further by rules they are supposed to follow.