I don't think it has reached diminishing returns for me yet. I don't need photorealism and I truly appreciate stylization and unique art styles, but I still think even stylized games can still gain in polish with modern techniques.
We've seen so much improvement in lighting, Shadows, bump mapping etc. It's these little things tha really add to the immersion for me.
Captain Toad for example is a gorgeous game thanks to all the little flourishes Nintendo put into it that would not have been possible without the overall advancements in graphics.
And people might have been mostly joking about it, but TLoZ Breath of the Wild would feel very diffrent without it's vast, filled to the brim grassplains. In fact realistic, or rather full, foliage is one of my pet peeves. It's been advancing steadily, but wer're still not really at the point where we see rich open fields with waist high interactive foliage, or wild jungle vegetation. Foliage is usually still too sparsed out and that actually takes me out of the immersion.
I really dislike it when foliage on a cliff just just suddenly turns into green to grey texture instead of gradually showing moss and plat covered stones shining through and the tufts of gras getting thinner and more sparse until you hit the cliff edge.







