Agreed. The pixel graphics of the 16-bit era have aged very well. I dare say they are timeless. I can still look at games like Super Mario World, Sonic the Hedgehog 2, Super Metroid, A Link to the Past, and Chrono Trigger and still go "This looks really nice."
Meanwhile, even at the time I was not terribly impressed by early 3D graphics, and time has done them no favors. They textures were awful and the low poly count models looked rough. I felt this was even worse in general on the PS1, though the N64 had its own problem with excessive fog in many games to cover up the low draw distance. The games that fared best visually were the ones that went for a deliberately cartoon-y aesthetic with flat textures, like Super Mario 64 or most of FF7 (the overworld looked terrible). Also, I will give the PS1 credit for supporting pre-rendered backgrounds, which often looked much nicer than the actual 3D models, plus the system did still have a few games with 2D pixel-based graphics, like Mega Man 8 and Symphony of the Night.
Honestly, I felt the industry abandoned 2D pixel graphics way too quickly. I guess they had to start somewhere, and making games in 3D was a learning process with a lot of stumbling blocks both in terms of visuals and gameplay. Still, the few companies that kept making 2D games showed it was still viable and there was still progress to be made even on that front. For example, Street Fighter III to this day still has some of the finest pixel art and sprite work of any game ever, and I still think it looks better than more modern SF games.
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