They don't doesn't mean they cannot. Even if Playstation 9 comes out, if the developer choose not to be photorealistic than the games will just be stylish graphic instead photorealistic (which is i don't mind). And yes there is always be a new bar in each new generation, but the bar will not be noticeable from now on. The problem is not the technology it self or the spec, but more of our limitation on seeing a higher resolution more than 16K. In games we don't need an artist rendering every atom and particle of our skin. So the goal on physical based rendering already achieved (except it just need a proper Ray Tracing)
But the point to my comment is we are already in the situation where photorealism on gaming will be hard to notice on each generation onward. Instead Developer will strive for physics and world interaction to create a living world and also they will focus on AI and simulation. There is so much to improve on games and that's not just photo realisme.
Pixel count is just a small portion of photorealism, and we can certainly notice a lot of difference from the models at fullHD from game to game. Just compare the facial model between three great games like HZD, UC4 and Detroit. You'll still easily see how much better Detroit is and they are all rendered at similar pixel count.
But geometry, polygons, texture, and several other effects are still improving a lot. Don't worry when gen 9 really starts to blow you'll be able to see the difference to Killzone or Infamous Second Son.
duduspace11 "Well, since we are estimating costs, Pokemon Red/Blue did cost Nintendo about $50m to make back in 1996"
Mr Puggsly: "Hehe, I said good profit. You said big profit. Frankly, not losing money is what I meant by good. Don't get hung up on semantics"
Azzanation: "PS5 wouldn't sold out at launch without scalpers."