In Xenoblade, if you looked at a tree or something far away and ran towards it, you'd see the textures and shape of the tree change a few times as you got closer. That's sorta draw distance.

There is always a tradeoff between draw distance and visual quality and simulation complexity that developers need to make in an open world game. Last gen was severely lacking when it came to RAM so there is only so much devs can have visible at any one time, so they made the trade off of having short LOD and using tricks like skyboxes to create the illusion of draw distance. This generation has a lot of RAM so that is less of an issue now as it was as seen in your example of The Witcher 3, however cross gen games like Watch_Dogs still have to be designed with last gen limitations in mind. Also A game set in a city having tall buildings everywhere blocking far views isn't a surprise.

There are some games that handled it well last gen of course with for example the mountains in Skyrim always being visible, or Just Cause 2. And of course it was a hell of a lot better than the prvious gen with shit like Morrowind with it's 10m draw distance with fog etc.

There are some games that still tout draw distance for example ARMA 3 which goes up to 10km.

South park on the N64 was the worst for draw distance ,it was like colarado was on fire there was that much fogging.

Same thing with Dynamic Lighting. Last gen things were off to a great start, Splinter Cell Chaos Theory, FEAR, Condemned, GRAW but then things got generic again.

I just remembered how good was the draw distance of some Nintendo 64 games: Banjo Kazooie, Mario 64.

My thoughts exactly xD

Yup.

Standing somewhere in the jerall mountains and seeing the other end of the imperial city, its fucking amazing

AC 4 has some weird unfolding effects, but it doesn´t seem out of place because of the Animus´s stuff.

But when you see something far in the distance, that's not exactly draw distance, is it? Usually landscape stuff is pre-rendered, then pops up when you get close enough. Games like Shadow of the Colossus did it almost flawlessly. I could be wrong here, but I though the term referred to the amount of the environment that was actively being rendered.