The limitation of world models, in the context of achieving artificial general intelligence, is not the validity or granularity or faithfulness of the model, but rather the limitation argued by Hubert Dreyfus, that computers are not in the world.

Whilst physics can be modelled, and hence kinematics and dynamics can be modelled, intelligence, in the human sense, is different. Intelligence, for humans, is sociological, and driven by biology.

Computers cannot parse culture because culture is comprised of arbitrary, contradictory paradigms. Cultural values can only be resolved in an individual context as an integration of a lifetime of experiences.

Computers cannot do this because they cannot feel pleasure or pain, fear or optimism, joy or sorrow, opportunity, disinterest or attraction. They cannot grow older, give birth, or die. As a consequence, they lack the evaluative tools of emotion and experience that humans use to participate in culture.

But wait, you may protest. Computers don't need to feel emotions since these can be modelled. A computer can recognise a man pointing a gun at it demanding money, which is as good as the ability to feel fear, right?

A computer can recognise faces, so surely its only a small step further to recognise beauty, which is enough to simulate the feeling of attraction, right?

A computer won't feel sorrow, but it can know that the death of a loved one or the loss of money are appropriate cues, so that is as good as the feeling of sorrow, right?

The limitation of this substitution of emotions with modelling is that the modelling, and remodelling has to take place externally to the computer. In biological organisms that are in the world, each experience yields an emotional response that is incorporated into the organism. The organism is the sum of its experiences, mediated by its biology.

Consider this question: In a room full of people, who should you talk to? What should you say to them? What should you not say?

A computer can only be programmed to operate in that environment with respect to some externally programmed objective. e.g. if the computer were programmed to maximise its chances of being offered a ride home from a party, it might select which person to talk to based on factors such as sobriety, and an observation of factors indicating who had driven to the party in their own vehicle.

But without the externally programmed objective, how is the computer, or AGI agent to navigate the questions?

Humans, of course, have those questions built-in to the fabric of their thoughts, which spring from their biological desires, and the answers come from their cumulative experiences in the world.