Zarsky

Pretty much.
Also, seems like Bobby's challenges were a real catalyst to this deal happening.
https://twitter.com/benfritz/status/1483627639201878021

They deserve each other.

That's why I previously posted that it's up to the artist; mediocre assets and/or wrong parameters and the photorealism goes out the window.
In contrast, here's a scene in UE 4.27 with full ray tracing that's bordering on photorealistic (different artist)


 

Age is the biggest component imo.
This is something I used to tell already back when I was moderating the Italian gaming forum, and that's many years ago: if we are realistic, we are not the target audience.
Most AAA revolves around these live service that we, as working professionals, in stable relationships, maybe mothers and dads, haven't got time for! I'm sure we have all seen stuff that looks like it can tickle our interest, but it's just too big and becomes offputting.
CliffyB was right when, responding to criticism to Gears of War, talked about the pros of shorter but more polished experiences. It's a shame we don't diversify more, for example I'd buy most COD games within the launch year, if they sold the campaign on its own at 1/3 1/2 of the price.
On top of time, themes are a big thing, there's not really much to connect nowadays for a mature audience.
I'm so glad I played Last of Us only last year, I think it triggered some emotions I would have never felt before becoming a dad.

I wonder if we’d have the same reaction from a blind test. I’m looking at this on my phone, I’m sure a random person on the street would think why I’m looking at desertic caves photos. What’s this weirdo into?
One thing that hasn’t been mentioned, but it’s a big component to achieve photo realism, would be the general simulation/rendition of air dust. Those city shots look very detailed but clearly CG because of that reason, IMO.
It’s something I never noticed until I went for a hike in Canada at 1200+ meters: the air was so clean, the pictures I took up there look so detailed, almost as if I used a different camera or lenses.
~
All of this looks great, and it’s very exciting in a way… but from a gaming standpoint I dunno how much I care: I always felt the real “next gen” would be when the AI would actually make the world feel more immersive, when systems are more interconnected and allow for long term consequences and make the player feel they really had an impact.

Yeah, lighting is an art form, more important than ever! Lumens is amazing, but you still need to know how to squeeze it's juice.

It all depends on the artist and what asset quality/megascans they use. One artist could use medium quality meshes/materials or wrongly set up parameters, and the scene automatically looks artificial/phony. As with any engine/tools, Nanite/Lumen tech is there in UE5, it's how you use them.
Here's another batch of shots from another artist:





 
 

With rocks, buildings and other lifeless objects they may get away with the photorealism, but with the vegetation, animals and humans i am more pesimistic that they will get out of the uncanny valley any time soon, especially if they are animated. The human brain is hardwired to detect every subtle detail that exist in the makeup of every living being. So good luck cheating that. 

More details

Unreal Engine 5.5 patch notes:
-added photorealism, based on feedback and request from fmpone 
But joking aside, I fully agree and that's why I wrote the boundaries are getting slim but not gone completely; a trained eye can still see it's computer generated but it's becoming more difficult to discern with each engine update
 
I remembered your post last time about pre-2010 gaming era nostalgia and I'm noticing this awful trend now for most games, where the graphics nowadays are getting photorealistic but the games themselves are getting dumber and too mainstream/simplistic.
Couple of days ago I watched a video comparing Far Cry 2 from 2007 to Far Cry 5 from 2018, and my goodness, FC2 blows FC5 straight out of the water. FC5 is a bit prettier in the graphics department but that's about it; FC2 is leaps and bound ahead in all other fields. You can easily feel the cringe seeing the parts where FC5 treats the player like an idiot who needs constant handholding and dumbing things down.
 

Does look great. Basically caught up with all those movies where I used to say "Imagine if games looked like this!"

With UE5, the boundaries between real and CG are becoming pretty slim



 

Some UE features are built around the console gen 9 minspec (nanite) so they probably wanted to show they could actually hit the minspec and put all their effort there.

Noooo? Really? Nobody could have predicted this.

Yep fun fact the BM VA Mike, also work on this bs remake too. It got some support from Crowbar Collective :0

This might give some insight to "what took so long?!" & "Why does it look like that?"
 
 

Hmmm I could see remake 

This might give some insight to "what took so long?!" & "Why does it look like that?"
 
 

ArmA 3 was pretty smooth if you ask me, the latest build of the RV engine was slick; however I can totally agree with you on the jankiness and sluggishness of Arma2, especially when driving. Always felt like dragging a chunk of jello across slimy mud.
Techland practically did the same for Dying Light 2 with the new in-house C-Engine. The devs were pulling towards adopting UE4 but management insisted on in-house engine to replace the aging Chrome engine of Dying Light 1.
Better control, faster iterations, faster implementation of custom solutions, better translation of your vision, better customized pipeline/flow, autonomy, keeping source code/trade secret, etc are some of the reasons to go in-house IF you have the talent and money as you said. 

Looks like BOHEMIA INTERACTIVE will be soon releasing and showcasing their newly built in-house game engine, Enfusion, to be replacing their old and trusted Real Virtuality engine that has so far powered most of the Arma titles.
Despite its age, the RV engine, especially in ArmA 3 shines really well when it comes to massive realistic open world locations, and it seems this new engine will be taking this realism even further. They promise it will be more streamlined and user friendly for creators and developers. The new Enfusion engine will be powering all future Bohemia's games. ArmA 4 is gonna be huge 
Seeing some of the screenshots and features, and I sure would like to give it a spin once it is released
the official website with all the info and faq
https://enfusionengine.com/