That's one use.
There are many others, such as simulation of human behaviour in a digital twin (you can make sure experiment variables remain the same, difficult to do in the real world), collaboration and ease of access to archeological sites around the world, aiding architectural work, etc...
There will always be a need for software like this as long as the world has these restrictions.
A prairie is called a steppe if it's in Asia. A steppe is called a prairie if it's in America.
A hurricane is a typhoon, except it's striking the west coast of the Atlantic instead of the west coast of the Pacific.
None of these make any difference to what the object is like. Why do we care? We don't call mountains something different when they're in Asia. We don't even call them something different when they're underwater, which makes a huge difference.
Also, prairie and steppe are subtly different, though if it weren't for historic reasons they might be named the same. A prairie is more moist and has more vegetation as a result, and can support more trees and general flora/fauna.
This is not true of American English, where "cyclone" unambiguously refers to a tornado.
Outside the heartland, the NHC categorizes many storms below the level of hurricane (64 knot sustained winds) as various kinds of cyclone (tropical cyclone, extratropical cyclone, potential tropical cyclone, post-tropical cyclone, alongside depressions).
In fact, in meteorology terms, a tornado is definitively different from a cyclone (a column of rotating area vs an area of area rotating around a low-pressure system). Hurricanes and typhoons are both kinds cyclones.
If I play a mile I'm like Arma, I don't actually want to be a soldier. Me playing Cooking Mama isn't a veiled psychological thing: I like both cooking and the gamified, simulated cooking.
It’s used for architectural Visualization, film backgrounds, and industrial visualization among other things.
Surely you can imagine why having realistic settings is beneficial in those scenarios.
No. Some people just like realism in their video games, and prefer the immersion or just think it looks cool. Not everything is a manifestation of existential dread.
If there were a general trend towards creating realistic enviroments as a means of psychological escape, one would expect those environments to tend to be more pristine and idyllic than reality. But often that realism is used to depict worlds no better, and sometimes far worse, than our own.
I'm sure some people are using realism as a means of escaping the destruction of our real world, walking simulators and the like exist, but I don't think that's a relevant influence overall. Just like with realistic CGI, people mostly do it because they can.
I know people who will practice flying at unfamiliar sites on it first - so that they’re better prepared when they get to the real thing.
For example, the INTENTION of antidepressants may have been at one time to treat severe depression, but as society (hypothetically) gets worse and more depressing, they may be used to help people cope with systemic problems and therefore ameliorate people's reaction to them.
Or phones: they initially were created to help people communicate but they are subverted (co-opted) by the system to make people more dependent on technology for the sake of technological growth.
Any number of products or ideas can start as one thing and become co-opted to serve a more insidious function beyond their initial purpose.
They point of having virtual environments is to enable you to see things in them you'd rather not see in real life.