Half-Life looked a lot better than that, but yes there are diminishing returns in detail. However we're still far away from realistic lighting, weather and other atmospheric effects. CGI in movies still isn't there. There is a clear difference between last gen remasters and current gen games in the lighting. Games have just recently begun with realistic materials for lighting, yet real time ray tracing is still out of reach.
Besides lighting, physical properties are still mostly no where to be found. In racing games you either have a rock solid chain link fence or a lamp post that simply snaps of when you hit it. The cars get scratches yet damage modelling is still in its infancy. Some games use pre-defined damage, GT5 tried some dynamic damage modelling which made the cars look like melting candles... Crackdown 3 is taking real time damage to a new level, yet it still doesn't look very realistic. Buildings shatter into pieces, but that's as far as it goes.
Most of the improvements will be seen in motion. Yet there's still plenty to improve graphically. Take a step back and see what reality looks like in 1080p


We're getting there







