Did Christians fail to understand, or even to recognise, Jesus, so that they were still arguing over his nature in 325 AD?
Answer: The year 325 AD referred to in the question is the date of the first ecumenical (i.e. worldwide) council, the Council of Nicaea, which condemned Arius teaching. The profession of faith of this Council, the so-called Nicaean Creed, joyfully acknowledges that Jesus is “of the same substance with (Gk. homoousios) of the Father”.
Many contemporaries make life unnecessarily difficult for themselves when they approach problems undogmatically and pragmatically, as they say. The word dogma sounds somewhat negative to many people because they associate it with the immovable, stubborn and un-free, and it awakens memories of the Inquisition, religious wars and moral constraints etc. Freedom of thought, speech, research, conscience and religious freedom are rightly considered valuable properties, also in the Church. Some even believe that we are now living in a time when Christianity is at its most un-dogmatic and practically oriented.
Why have they been and still are internal Church discussions regarding the correct understanding of faith and its declarations? Jesus Himself admonishes in the Gospel according to Matthew: Everyone therefore who acknowledges me before others, I also will acknowledge before my Father in heaven; but whoever denies me before others, I will also deny before my father in heaven. (Mt 10:32-33). All Christians are called to give such an unequivocal acknowledgement. To make the Creed unambiguous requires also unanimous acknowledgement. Since there have been splits and parties in the Church since the beginning (cf. Acts 6:1; 1 Cor 1:11-13, etc), we frequently find in the New Testament an admonishment for unity. Now I appeal to you....that all you be in agreement and that there be no divisions amongst you, but that you be united in the same mind and the same purpose (1 Cor 1:10). The diversity in proclaiming Gods word, the form of Mass, theologies and order of the Church are legitimate and even desirable. The intention here is not to impose a flat uniformity. But legitimate diversity should be distinguished from a diversity of contradictory declarations of faith and ethical doctrine in the core aspects of life. An unrestrained and wild proliferation of pluralism would make the question of and search for unity meaningless. If Christian truth was not clear and definite, shared worship of Christian would be meaningless and the Christian faith would lack any credibility. The Church is thankful for the beneficence that God grants her by bringing her ever closer to the truth by the power of the Holy Spirit in the midst of all the confusing and destructive ambiguity, and that He accomplishes this through His people and through human actions i.e. through the reflections of, and at times tense disputes between, theologians and the shepherds of the Church, who are called to serve the unity of the Church.
A dogma such as the creed from the Council of Nicaea regarding Jesus Christ is no addition to the original Gospel or even a new revelation. It is an exegesis, officially binding for the entire Church, of a revelation valid for all eternity to delineate against erroneous, abridging and adulterating interpretations. Dogmas contain two aspects: They must refer to the original and common revelation of truth, and they must be presented as official and conclusive and binding for all believers. When the Church does this, she trusts in the presence of Jesus and the support of the Holy Spirit promised to her, who will lead her to all truths (cf Jn 16:3).
Faith is a comprehensive life concept and a holistic attitude towards existence. The whole of this is not one sentence or a sum of sentences, but trusting and building on God as He has revealed Himself to us in Jesus Christ. Therefore, we do not believe in dogmas in the same way that we believe in God, Jesus Christ and the Holy Spirit. We believe in the dogmas as a concrete form of intercession for the substance of faith. It is not dogmas that justify the truth of faith but the truth of faith justifies dogmas. They are not true because they were proclaimed, rather they were proclaimed because they represent the truth. We need them so that we, as one body, can unequivocally acknowledge the truth of faith. Dogmas hold to the truth beyond themselves that God is the almighty Father and the Father of Jesus Christ. Everything depends on this truth (abbreviated from Katholischer Erwachsenen Katechismus (Catholic Adult Catechism), Vol. 1, pp. 54-58).