first of all, there are plenty of games where the top tier of weapons can kill you instantaneously with a single headshot or even bodyshot.
the thing is, this concept is not particularly realistic. in real life, it is pretty rare for people to die instantaneously from a single shot. while there are a couple key points on the body where this can happen, usually people are going to bleed out over the course of minutes or hours. while this happens, the injured person can be anywhere between totally incapacitated and running around killing people, not even aware they've been hit. it's hard for me to see how this could be incorporated into a fun set of game mechanics. people like all kinds of different games, but in general I suspect they are looking for something a bit more deterministic than reality.
"Escape from Tarkov" is also praised for "feeling" realistic, but I can't say much on that.
And then watch the memories fade in real time
that happening to a nonsignficant character
The truth is that sounds a bit stressful to me, and the reality of how online PvP frequently evolves I’d be surprised if it worked out long-term. Part of the joy of games is being able to try again and again and perfect your gameplay. A game that punishes exploration and growth sounds dull, not daring.
Real life simulators tend to be boring / tedious compared to mass market games. "Sniper: Ghost Warrior 3" is probably one of the least generous (as far as health goes) games I've tried to play, and it was tedious and boring. That's not to say one example means the idea is inherently as bad as that one game, but it does limit appeal significantly.
(Often the same FPS game will let you scale the difficulty from easy to something where being shot multiple times probably means death/restart/whatever.)
I think most people spend their lives trying not to think about death in a realistic way.