A large section of the gaming public sees photo-realistic games as serious, and prefers them for high-budget games. It's a rat race for devs though - its just incredibly expensive to create high quality models, textures, maps.

I've been playing Cyberpunk 2077, and while the graphics are great, it's clear they could do more in the visual realm. It doesn't use current gen hardware to the maximum, in every way, because they also targeted last-gen consoles. I'm thinking in particular of the PS5s incredibly fast IO engine with specialized decompression hardware. In a game like Rachet and Clank: A Rift Apart, that hardware is used to jump you through multiple worlds incredibly quickly, loading a miraculous amount of assets. In Cyberpunk, you still have to wait around in elevators, which seem like diegetic loading screens.

And also the general clunkiness of the animations, the way there's only like two or three body shapes that everyone conforms to - these things would go farther in creating a living/breathing world, in the visual realm.

In other realms, the way you can't talk to everyone or go into every building is a bit of a bummer.