I would suggest that both are true!

It's common for games to have an intentional designed aesthetic which uses cultural and social and graphical "languages" to create specific emotional impacts and effects. The lower the budget the more this is leaned into for expedient reasons but that in turn creates genre expectations! Low-poly and 8-bit are fine examples of what were once a product of technical limitations becoming their own target.

Subject matters also, and the overall aesthetic of the game; triple-A games often push towards what you're describing, that the most impactful and compelling may also be the most real...

...or at least, contain elements of it. Lots of games mess with color shading and saturation etc for the impact-reasons...

I do look forward to the era of more "photorealistic" rendering as you prefer, especially for natural landscapes like those I enjoy IRL. Some of which can have very "unnatural" feeling swings in tone and all sorts of things! I was just up in the mountains this week and saw a lot more variation in lighting and its impact on a consistent landscape (mountains across a lake) than I've ever seen in a game engine so far :)