That doesn't make sense. You can still have amazing graphics and have a game driven by atmosphere. Silent Hill 2 is the best example of that, obviously, as this thread is about it. I mean, SH1 doesn't scare me nearly as much as the second one did and it had way worse graphics. SH2 looked beautiful and gritty with stunning lighting effects that really enhanced the dreadful mood. If these same guys made a Silent Hill for the PS4, it would look absolutely phenomenal! Once again - just look at PT even! By far one of the scariest experiences ever crafted! Absolutely mindblowing, state of the art graphics - in fact some of the best I have seen and it still has incredible atmosphere that SH is known for.
THAT is where I'm going here. :) Can't argue that, really.
You still don't get it.
The low resolution textures, and simplified geometry forced them to put much of the detail into the textures, as a result, the overall look of the game is comprimised primarilly by low resolution assets, and in most cases, shrouded by darkness or low light, with many elements of the textures being unclear and not easilly identifiable, "is that dirt or blood, fungus or scratches, are those faces or just the pattern of the wall?" combine that with the darkness and the grungy feeling and the player is forced to subconciously fill in the blanks left by the technical limitation.
a full HD / 4K game with crystal clear assets, fluid motion and significantly better lighting may well make the game "LOOK" better, but it also strong arms back creative control from the player to the designer, giving the player much less to fill in subconciously.
And in doing so it also makes the "atmosphere" much more generic, when a player had subconcious control over what it is they think they see, the game can naturally cater to their particular brand of scary, allowing them to tailor-make the experience scary for themselves, take that element away and you may well end up with a game that scares some people and looks really good, but you will have lost the ability to allow the individual to scare themselves, and instead have to rely on shitty mechanics such as jump scares and audio queues.