Here's where it gets tricky. I do a lot of modeling and simulation work that is often incorporated in interactive 3D environments and the conversation I have over and over where people fail to realize is that you're always taking shortcuts to simulate some aspect of reality.
The point of games is to get as close to reality that people suspend disbelief and can immerse themselves into the virtual reality you've created. Sometimes enough realism and immersion can be had at cheaper computational costs so these hacks (gross simplifications) are the way to go. Sometimes though, you realize if you can better model aspects of reality more accurately, you can get even better immersion a d suspension of disbelief.
In the world where more sophisticated computational models are utilized in these environments because the results are important, used beyond suspension of disbelief and actually need to map reality because the simulation is trying to accurately represent some aspect of reality for a real world decision to be made, you still have to take clever computational shortcuts. As far as we know that will always be true unless you build a simulation environment that can fully represent our reality which might never be possible from an engineering or even scientific standpoint.
So the discussion I often have is: what deviations from reality are we willing to tuck into our models and simulations? We already can't do all of existing science and we can't do what's beyond existing science so what tradeoffs can we accept in the subset of science for our simulation.
Even raytracing doesn't go far enough because it takes a lot of shortcuts with reality. Pretty much none of these engines take into account relativistic distortions of light (some work has been done) and they frankly don't need to for almost every application outside of visualizing gravitational lensing and black holes accurately. In sure some bright physicist reading this is aware of even more faults in light and photon models and simulation approaches I'm completely unaware of. The onion peels quite far. The most obvious missing aspect for all environments is that we always simplify the actual geometry of the space because we have to.