A timely example is Disney's Book of Boba Fett. The show is almost entirely CGI except for the actors. There have been some criticisms about particular assets like the biker gang's speeder bikes. But I've yet to hear anyone complain about the environments looking fake. Mos Espa is almost 100% CGI and it looks like a real set.
When it works your brain just accepts it. CGI is incredibly good at environments. I'd go as far to say that it has been indistinguishable from reality for the better part of a decade now. Where its gets noticed is in places where it doesn't do so well or when there were time or budget limitations. Fully CGI humans are still not believable and will probably be the last thing to get right. CGI non-human creatures have varying success. Compositing can still be difficult. Often its better to replace an actors entire body, save for the face, and create a CGI version in a fully CGI environment. Compositing a real person in a CGI scene is prone to floating body syndrome and lighting issues.
The real answer isn't necessarily that one is better than the other. But these are tools which should be used together to make a better product. And I think you'll find that modern films with the best overall effects do blend the two. Mad Max Fury Road is a good example, the vehicles are real with real stuntmen climbing on them but the environment is artificial. Shooting a film in the middle of a desert with nothing in sight is not practical. But shooting the scene on a sandy path and compositing in the CGI desert is.