Well. You know my position on resolutions.
1080P is old news. 1440P is affordable and a marked improvement over 1080P.
4k is still reserved for the high-end.

I disagree.
Battlefield 1, despite how pretty she looks in places... Can still have landscape textures that look like a dogs breakfast.

That is both on the Xbox One. (Mostly 720P/Medium settings.) and my PC (1440P, Ultra.)
At 1440P and 4k due to the increased clarity, you do tend to notice lower-quality assets easier.

We have had Dynamic Lighting for almost 2 decades.

But even today's lighting is not very accurate... And as FatSlob alludes to... Global Illumination can provide for some big gains.

But really, this generation has been all about the "little details". - Massive increases in geometry allowing for smaller details like tiny rocks on the ground to "pop", lots of particle/smoke effects, material based shading and so on.

And everything is generally more dynamic.
Last console generation, shadowing, lighting and such was "baked" into the texture work as the amount of power they offered was extremely limited.
This generation, details tend to be more dynamic, which is also more computationally intensive.

Which is also why during the very end of the last generation consoles... Some multiplatform games actually regressed in graphics.
Developers had started building their games with dynamic details... And didn't bother to bake those details when backporting to last gen consoles, so they looked very bland by comparison.

It's also in CryEngine, Frosbite, Unity and so on...
But they are all differing on their implementation and thus quality.

This will give you a good idea on the different types of Global Illumination.
https://colinbarrebrisebois.com/2015/11/06/finding-next-gen-part-i-the-need-for-robust-and-fast-global-illumination-in-games/

Jaguar was a massive jump over Xenon and Cell, especially with Integer capability.
Not everything is about theoretical flops you know. ;)

lol They will never get to the level of pre-rendered films. A pre-rendered film contains 1% as many locations, and characters as a game. You couldn't pay the artists to do that much high quality work. You might as well demand a photo-realistic film be made exclusively by painters. You might as well ask a movie studio special effects team to recreate 100 square miles of the amazon, with fake trees and animals, for a 100 square mile theme park. Graphics of that level just aren't financially feasable unless we are talking about a very, very limited game. 

If UE4 is trash, then what is the best game engine? 

I couldn't agree more. Any space combat game with VR is a huge gamechanger. Being able to fly and instantly look around the cockpit is fantastic. Having stereoscopic 3D adds more to graphics realism than any amount of lighting, texturing, or FPS. Honestly I hope the PS5 comes with VR built in. Full blown VR is next gen. Slightly better graphics is not. 

It's true however ... 

You wouldn't need anymore texels than pixels in an ideal world but because of the distortions in screen space with respect to how the texels are mapped to the geometry and how there's very few ways we can prefilter in real-time our life just isn't as simple ... (There's really no use for higher texture details once we take into account signal processing theory since the extra information would just be 'filtered' from the output.) 

For 4K you wouldn't need textures any higher than 4096*4096 unless you put your camera to only a quarter of the surface of the assets ... 

I think we'll get into the ballpark of pre-rendered films just like how PS4 was able to reach the quality of pre-rendered films from the pre/early new millenium ... 

Nope, you are wrong.....

but this is kinda the same thing that happens every gen; and it really just goes to show how limited most peoples imaginations are. There is always that notion that what they see is the best it can really ever be until they see something better then rinse and repeat.

There are so many things that stands to benefit from a generational leap in hardware that are yet to be implemented in consoles. Right off the top of my head, true 4k capable processors, HBM memory, Nvme SSDs.... all those things individually can not only change how games are made but could all represent a generational leap in hardware potential.... all those things combined?

Well use your imagination.

no opinion on UE4...

but best engine has to be what Horizon Zero Dawn was made on, its simply nuts what it can do on a base PS4 slim.

I haven't actually spent much time looking at what Horizon: Zero Dawn has done on a technical level. But I would assume they achieved what they did with an abundant use of baked details.

Definitely not true.

You can notice a big difference between 2k and 4k textures even at 1080P.

The main tradeoffs they made were very static environments, (foliage and water don't react to the player) low levels of AF, and short shadow LODs.

Signal processing theory shows otherwise ... 

2048*2048 -> 1920*1080 (50.5% texels wasted) 4096*4096 -> 1920*1080 (87.6% texels wasted) 

Both of the above cases are a result of oversampling more than necessary and is thus wasteful in terms of memory and bandwidth consumption. When texture sampling, very rarely does the texel density matches the pixel density so we either get undersampling or oversampling ... 

It is only when you map from a continuous domain to a discrete domain to represent a continuous domain that the information lost is important, take for example rasterization. The way we represent triangles on digital displays is flawed since it produces aliasing due to our reconstruction methods. We use edge equations to represent vector graphics on digital displays by rasterizing (or scan converting/sampling) the primitives ... 

Undersampling can lead to information loss as shown here known as aliasing which produces undesirable stair stepping artifacts not unlike the real triangle ... 

I didn't know low levels of AF was an issue with H:ZD reading the DF article but texture sampling is improved on PS4 Pro ...