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Wyrdness said:

Mate are you having a laugh firstly 0:39 shows the torch casting a light, secondly look at how the shadows shift when characters and monsters are moving at this point you're reaching, Shenmue was a good looking game for it's time but the are many factors you didn't realize when you declared that notion.

They're not though, at 0:53 on that video the torches are being waved back and forth as the players swing them, but their shadows do not sway back and forth in response, nor is light being cast on the Great Jaggi. Meanwhile, at 8:44 in DF's video above, walking passed a light source clearly causes Ryo's shadow to shift in response.

Then of course there's the simple fact that MH 3DS looks, well, like this:

No game releasing in the modern era should look this terrible.