The main point was that film isn't interested in exact photorealism. As you said, it doesn't matter, because the simplified models are good enough. Therefore it's unlikely that the film industry will be the first to produce a fully computer-generated video that will be indistinguishable from a camcorder capture.

The reason most of the CG you see in TV or movies looks very good is because they take place within real video. We're not looking at a completely CG scene -- it's mixed with video from the real world. And that's a perfectly valid technique, but my comment was talking about 100% CG.

A secondary point re: the film industry is that artists must necessarily retain control of the art pipeline in order to create scenes that advance the plot. That requires the art pipeline to be flexible. The more flexible your art pipeline, the more productive your studio is. Yet that flexibility is precisely opposite to realism. Obviously, the more realistic a purely CG scene looks, the less flexibility you get, otherwise it wouldn't appear real; hence the argument that the vfx industry won't be the ones to produce the elusive fully-CG fully-realistic video. (It doesn't make financial sense for them to do so, if nothing else.)