I remember when the Xbox 360 came out and I played demos of its games at EBgames and K Mart I was really unimpressed by its graphics. It took till Gears of War before there was a game that made me go 'wow' when I saw footage or screenshots. Then 2007 had beautiful games like Bioshock, Assassin's Creed 1, COD 4. But for the first year the jump didn't seem so impressive. With Gen 8 it took even longer for games that seemed a true generation ahead to start coming out often. There were a few games like Ryse that were far more beautiful than anything a gen 7 system could do, but those tended to be more like tech demos than full-fledged games. The Order 1886 was the biggest offender in that regard. But by 2015 we started seeing games that really looked a generation above. By 2023 I expect the differences will seem huge to everyone.
The law of diminishing returns is real, but it has always been blunted by the development of new technologies and new techniques, Pixel shaders in gen 7 made characters and environments look like they had many more polygons than they actually did. Ambient occlusion provided a natural look that wasn't possible before. Ray-tracing is the big one nowadays. With a generational leap developers can't get away with doing the same things they did on older hardware, but better. That something new has to be there that wasn't there before.
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