[MichaelCollins]

The pursuit of realism hit diminishing returns years ago; the manpower needed to make a game hyper-realistic isn't justified by the number of additional sales it will produce. Instead of becoming more realistic, most games have instead focused on having more bright neon particles swirling around on screen. That's much cheaper and much more effective than chasing further realism.

This will likely change in the near future as the industry invents ways to replace human modelers, texture artists, etc, with automated "AI" tools.

[georgeecollins]

You are right, but I think it goes back and forth. I can recall seeing a game I was working on (Homefront 2?) where it looked surprisingly photo real - at least as a prototype. But the physics took you out of the illusion as soon as anything moved.

Nowadays I see developers doing amazing things with shaders, like you said. And stylized models are easier to make, but also less in the uncanny valley.

Realism can be cheaper when you don't care about optimizing, or AI can optimize for you. When you can scan in objects and it is workable in a game engine that's cheaper than designing them. We're there with mo-cap vs character animation.