I don't agree with the diminishing returns argument. There is massive improvement still to be had, the problem is it requires complementary hardware and is expensive. The one aspect the ps5 crushes the ps4 with is lighting, but without OLED the difference is somewhat negated. 120 hz is superb, but requires a TV that supports 120 hz. The list goes on and on.
The days of noticing the benefits of a new system regardless of other hardware are gone. But with the right hardware the differences are stark.
I just upgraded to a rtx 4090, is slaughters the ps5. But again requires a good TV/Monitor and of course isn't cheap.
So diminishing returns exists, depending on how it is define, but graphics can get way better than seen on consoles.