The Capcom fighting games on Dreamcast were arcade quality at the time. Absolutely stunning. My favorite was Marvel vs Capcom. I wasn't very good at it, but I was mesmerized by the graphics and great overall UX.
IIRC the Dreamcast and the Naomi arcade system are very similar. The arcade systems have about twice the ram, and can run from rom cartridges as well as optical media (read once on boot into a dedicated disc cache), and there's some variants with interesting I/O, but there wasn't a difference in compute or GPU capabilities.