That's CGI , games does not required to render every atom and particle of each object. Current gen hardware can already achieve cheap way to render the graphic for gaming purpose.
Exactly, so are all computer graphics look at how far we've come from CGI in movies from 10-20 years ago. Techniques get passed down and technology moves on. We are nowhere near photo realistic graphics. Just look at the art and animations created in blender its astonishing like real life in some cases.
Anyway watch the below video, its a good explanation to what photorealism means today.