Uh, I don't think so.

The sky's the limit in games.

But where does the sky end!

I was about 9 times higher than the international space station there and made it back down to a safe landing!
Ultra realistic flight simulator :) It didn't fly very well up there though, as in not at all, just flopped about while falling.

No limits. I like escaping reality every once in a while. I can't (and wouldn't) fight dragons in real life but can't get enough of it in games. Although, when a game is supposed to be realistic I cannot stand when something looks absolutely fake. Like how zombies in TLOU can only hear the player but not the player's AI companions. Hate that!

The structure, content, physics etc.... of any game is really up to the developer. Realism can be awesome, but it's certainly not required for a compelling title.

They are just supposed to look realistic

No, there are limitations other then what the devs decides. 

You would be suprised how easy it is to create flying and god mod physics, or tons of insane things just by playing around.. 

I removed gravitation and was floating around once, even the houses was floating around, if you bumped into them, they pretty much flew away! 

I don't think there should be limitations.. each game is unique in it's own way, so as long as things fulfill and convey what was intended, I think that's perfectly fine

Its not a limit of realism.

Its a limit of what we can comprehend. At a point it will be something people just cant grasp or get thus they shun it.