Well, I'm going to speak for myself.
When I played SNES games back then, I loved many of them, but I always wanted more from them. More content and more things to do. That's why I started loving RPGs and simulators, because they were more than just trying to beat the boss 10 times until you do.
After playing SNES games, I couldn't try out NES. NES games were just too old, specially compared to things that I had on PC like Doom 2.
When I saw Doom 2 for the first time, I though, "wow, look at this world, look how I traverse it". Then I couldn't enjoy something like those air plane shooting games on NES/SNES. Even understanding that they were different experiences -- Arcade experiences. That was too deprecated for me already.
Then I saw Mario 64 and then Ocarina of Time. I was playing more PC that time. I thought, "Nintendo got it". This the the kind of worlds I want to explore, again and again. I want more from this. I want games that I can endlessly play and explore for hundreds of hours. While I was excited about Nintendo back then, in recent years I haven't seen much improvement. It was like every new Mario and Zelda was just the same thing. Besides after PS3, Nintendo started to look repetitive and old fashioned to me.
With PS3, the action RPGs, open world games and adventure games just blew my mind. They were the evolution of everything I was looking for since I saw games like Doom 2 and Ocarina of Time. More and more content, big worlds, big quests, better controls.
The same improvement I saw on Sports and Racing.
Today, games like Witcher 3 and Horizon Zero Dawn represents everything I dreamed about 20 years ago.
On the Japanese side of games, like Japanese RPGs, most Nintendo titles and such, I just don't see much difference and for me I don't see much evolution. If gaming was a Japanese thing only, I guess I wouldn't be playing games any more. But when I see things like:
Witcher 3, Horizon Zero Dawn, God of War, Project Cars, Uncharted, MGSV, Uncharted trilogy, Spider-man, Red Dead Redemption 2, Persona 5. Well, I'm sure that those games provide me with much better gaming experience than all those arcade SNES/NES games and most of the best N64/GC/PS1 games.
On the Japanese side, as I was talking about, I see some exceptions like Monster Hunter, Persona, a couple of recent Zelda titles, Mario Galaxy, Xenoblade Chronicles and Chronicles X, Splatoon. However games like Mario Kart Wii, 7 and 8, Mario 3D World, Yoshi's, Mario 2D, most Japanese RPGs, even Zelda BotW to some extent, recent FF titles, recent Fire Emblem titles, they just look like they didn't improve much or just got worse. Nintendo overall got worse in almost every single title. The Japanese kind of just modernise here and there, but every time I play most of those games, it's like I'm playing something old and recooked.
Of course the same can be said about most Western games, like shooters, but at least in my head now I'm trying to compare the best of today with the best of old and the best of Japanese with the best of Western. No way I'd trade Witcher 3, Horizon, MGSV and RDR2 with Zelda BotW, new Mario, MK8, FFXV or any of those best on Switch and Wii U or all those of the best games on SNES/PS1/N64/GC.
So, I'm speaking for myself here: yes, games today, especially those on PS4 and the western ones are truly my childhood dreams coming true. It's like the western industry heard me and gave me all that.
I just don't buy this "games aren't as fun as they used to be" argument, not as some kind of objective statement of truth. I've been gaming since the Atari 2600 and I would say that, on an individual basis, I probably have more fun with most of the games that I play now then I did with most games from the Atari to the PS2. The stuff I play now generally has a LOT more content, better writing, better mechanics, less frustrating conventions, less loading screens, better save practices, better characters, and more immersive worlds. I'm very happy with the progress gaming has made.
I don't really understand why people do the "I'm going to pick out a great game from back then and compare it to a bad game from now" thing, either. That's kind of silly. You could throw a stick back then and hit at least 5 terrible games because there was so much shovelware. Big name stuff, too, like Star Wars, had absolute garbage games.
Another point is "lack of innovation." Well, yeah. That happens as ANY industry matures. There is only so much innovation to find relative to technology. Immature industries have a lot of experimentation, much of it bad, before people find out what works well and what does not. After that, refinement becomes more prominent.
Look, I get that some people as they get older fall into that "this is what I like and anything that changes it is bad" mentality. But that's you, not the media itself.
I couldn't agree more with everything you said.