There's still so much that can still be done when it comes to game visuals. Better lighting. Better draw distances and less noticeable object/texture popping/"LoD-ing." Better animations. Better textures. Just better quality all around, and running at better frame rates and higher resolutions than what was the norm just a decade ago.
I remember a lot of people thinking this gen wasn't going to be much of an improvement over last gen. They were wrong. Sure, some games leave a lot to be desired even by the standards of this generation, but the best-looking games of this generation blow away even the best-looking games of last generation. And it's only going to keep getting better.
When it comes to gameplay, things are mostly just a series of general refinements (most old 3D games had lousy controls and bad cameras, something that's much more rare these days) and games coming up with specific gimmicks to distinguish themselves. We're still basically playing just the same kinds of games we did 20 years ago. The last time we saw a truly major leap forward in game design was the switch from 2D to 3D. Video games have as a medium been marked by evolution, not by frequent radical advances that fundamentally reshape the medium itself. And that's perfectly fine. I'm honestly cool with each successive generation having been basically "better graphics boxes." There's no need to reinvent the wheel.
(Referring to the bold) I have to disagree. Almost every generation sees signficant avenues of gameplay open up, with generation 8 being the exception. Generation 6 was the first time we could have open world action games like GTA 3 and Shenmue. PS1 had a lot of limitations in the action/speed deptartment, and N64 had limitations on game size. But Gen 6 games could handle both just fine, so we get open world action games. In Gen 7, motion controls were one obvious new type of gameplay. However the more important thing was that the internet became commonly used in games. Mario Kart Wii was the first time I could play Mario Kart on the internet for example. Internet gaming allowed new types of gaming on consoles.
But Generation 8 really had nothing. It was just like Generation 7 but with better graphics. Nothing new. This is not rule. It's the exception. But Generation 8 was the most recent generation and it offered nothing new. We expect nothing new now. It's like we expect we're going to be bored at this point. It's kind of sad.
Gen 7 was also impressive with how many NPCs can be on screen at once. Why Dead Rising was so impressive. The other thing was massive set pieces like so many shooters that gen had massive giant enemies detroying a city. Bullestorm and Killzone 2 and Gears of War all did this.