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famousringo said:
The danger of a linear game is that it may leave the player feeling powerless, like s/he's just along for the ride and doesn't really have any control. The player feels herded and restrained, and it's not a very fun experience.

The danger of a game that's too open is that the game may feel aimless. Presented with so many choices, it's hard to feel like any of them have much meaning. An NPC says, "Hurry up and do this story mission," but the player wanders around doing whatever s/he pleases with no real urgency. It leaves the game feeling unfocused and detached.

The trick is to strike the right balance between the two extremes for your game, then mix in other elements that combat the weakness of too much openness or linearity. If your game is linear, take measures to ensure that the player feels powerful and free, rather than strung along by the game designer. If your game is open, make sure to give the game a sense of structure and meaning, so that the player doesn't get lost is a sea of choices, indecision turning to apathy.

I think this comment rings true. I think Half-Life 2 is a great example of a linear game that does a great job of making you believe that you're actually a part of a large open world. There are of course others. Uncharted 1 & 2 and God of War also do a good job of giving large scale to a linear experience. And also Crysis gives the impression of being a a large island, and each individual level is fairly large, but the actual path you take in the game is very linear. On the other hand, Fallout 3 and Oblivion do good jobs of the opposite having a large and open worlds but being well structured in their quests so you don't get too lost.

I will add though it does depend on genre and somewhat on expectations. If the next Elder Scrolls game had a strictly linear path it would probably score very poorly. Whilst the story in Final Fantasy has always been linear, many of the previous games had a lot of free roaming with towns making the world more believable and immersive. Having not played XIII yet I can't comment on it individually, but if you have an established series, certain elements are going to be well-loved (such as a free or at least the impression of a free and open-world), and their omission can cause people to criticise the title for it.