For instance, the Hololens is rumored to have 1280x720 resolution per-eye - so a screen that consumes the entire visual field is only 720p, and "simulated displays" that were farther away would be worse.
You could have one virtual display with close to your face for high resolution information, and then dozens of peripheral displays further back for ambient information. Displays can move forward and back with subtle head movements. Why is the hardware resolution the limit? Isn’t it more of a UI problem?
It’s like people are assuming the VR desktop is limited to being an exact replica of their physical monitor, but why would you do that?
To your specific example of "You could have one virtual display with close to your face for high resolution information, and then dozens of peripheral displays further back for ambient information.", yes, absolutely. That makes sense. But the "close to your face" one would show you less than a paragraph of text, if you could actually see the peripheral ones all the time. Useful at times, to be sure, but not equivalent in all (I'd argue "most") situations.
[1]: plus some fudge-factor, because you can read a bit better than with a comparative screen - the change in how the text lands on pixels as you move gives you a slightly higher "effective" resolution... though text at this size is still plenty difficult to read, so you still don't want to rely on it.
No matter how much you play with bringing some virtual monitors/displays closer or further away depending on focus it's always going to be inherently limited by the internal display resolution. Even then in VR headsets the lens distortion means text isn't really readable outside a small FOV directly ahead of you. Eventually we'll get cheaper better screens in these headsets but that'll require a lot more rendering power and still doesn't get past the fact that you're losing a lot of pixels to anything that isn't the display so the headset screens have a long ways to go before they can look anywhere near as good as the normal displays we use.