I don’t think reducing damage types is necessarily bad, but I do think OP’s suggestion is too radical.
In my opinion, a nice trimming of damage types could be achieved like this: remove Internal Trauma completely (I think Bleeding is sufficient as a DoT counterpart of Physical); remove Acid completely (Poison is famous in ARPGs as being the DoT damage, I don’t think it needs a burst damage counterpart); remove Pierce completely (I realize this is very controversial, but I think the distinctiveness of Pierce damage done by assasins could be achieved in a mechanically different way: have all Pierce weapons do Physical damage, with a chance to ignore armor - this way you don’t have another damage type, but you do have another attribute, and weapons with that attribute could be stylistically designed to feel somewhat homogenous and different from weapons with Physical damage which don’t have increased chance to ignore armor).
Most importantly: do not dare to remove Aether and Chaos damage from the game!! They are both thematically and visually fantastic, and it would be such a shame if players lost access to them in GD2.
So the damage types that would remain would be: Physical, Fire, Cold, Lightning, Burn, Frostburn, Electrocute, Poison, Bleeding, Vitality, Vitality Decay, Aether, Chaos.
If that is too much, elemental DoTs can be removed and compensated by adding distinct effects: for instance, wherever you now have Burn damage, you could replace it by Fire damage with an AoE effect (e.g. affects everything in a certain radius); for Cold damage, you could have a slowing/freezing effect); for Electrocute, you could have a chance to stun, or maybe a chance for huge crits mixed with chance for complete misses.
But most importantly: do not remove Aether and Chaos!