I feel like this is a fine concept, the article just needs some serious re-writing, and much less games attached.  The other problem is that "immersion" is defined by topics such as ambient noise, persistent character damage, no hud, in game fiction, etc. which all have their own concept pages. 
 
What about this:  
Immersion is a concept that refers to a game's attempt to draw the player into the game world.  This can be accomplished in a variety of ways, including: 
Having no HUD 
Persistent Character Damage 
Ambient noises 
Interactive cutscenes 
Integrating Tutuorials 
Fictional companies/brands 
 
Immersion is a somewhat nebulous concept that is subjectively defined, however it is an important concept in the development of games.  Initially, video games lacked the sophistication and technical capability to fully immerse the player in the game world.  For example, no one will ever confuse a game of Pong with anything that resembles reality, as it is flat, contains odd sounds, and lacks depth. 
 
As games developed and technical capabilities increased, however, the potential for a fully immersive game experience developed.  Game developers began to use new graphical and story telling techniques to pull the player farther into the game world.  An early example of this is Myst for PC systems.  Myst used photorealistic, pre drawn backgrounds to give players a beautiful and detailed world to explore.  Myst also used a first person perspective, and offered players minimal instructions, helping to pull the player into the game. 
 
After this, however, immersion somewhat stalled as an important concept.  While games continued to improve, with better 3d graphics and sounds, there was little emphasis on increasing realism.  For example, Super Mario 64, a shining example of overall game design, technical capabilities, and almost universally well received, still always felt like a video game. The player was tasked with objectives such as obtaining enough "stars" to open new worlds, received tasks from Lakitus through scrolling speech, and fought Bowser by hitting him three times. 
 
Shortly thereafter a leap forward in immersion came from sports games.  Baseball, football, and hockey games all took major leaps on the Playstation and Saturn to improve their presentation.  This meant liscencing agreements with EPSN to use actual television graphics to display scores and stats.  Also, NHL games began dropping the health meter during player fights.  Football games began showing Jumbotron replays in-between downs.  Game reviews noted that these games were getting closer to watching the real thing. 
 
This development began to spread to other genres as well.  In the shooter genre, games such as SOCOM increased the level of realism.  SOCOM used highly technical terms to refer to weapons and military equipment, for example you did not obtain a "Rifle" but an M16.  Additionally, players could only carry limited equipment and ammo, as opposed to previous games where players could pull out seemingly endless weapons.  Also, there were no healthkits, and one or two bullets would completely incapacitate the player.  Finally, SOCOM asked the player to kill as few enemies as possible, in keeping with the real-world implications. 
 
Games such as RPGs began to see similar developments.  For example, Final Fantasy X developed a full world with a complete backstory, political tensions, and social mores.  Although the heavy emphasis on story is common in RPGs, FFX is a good example of the PS2 generation taking it further.  FFX, for example, reduced the HUD during random battles, making it appear that the player had simply run across dangerous monsters, rather than engaged in a strategy game.  Also, the mini game integration increased. Blitzball was created a sport, and NPCs would reference the sport throughout the game.  
 
In the current generation, this has reached new heights.  GTA4 is a good example of this.  In GTA4, the game world is fully developed to be a realistic and immersive city.  The city is gritty and dirty in places, much like in real life.  The player has a cell phone on which he can receive or make calls, and a computer that can actually access fake internet sites.  The radio plays both music and advertisements.  These all help pull the player into the game world, and, in a sense, forget he or she is playing a game. 
 
Techniques 
No HUD - Removing the heads up display, or HUD, from the game helps increase immersion.  One way this is accomplished is through better player modeling.  For example, in many games the player character will accurately reflect damage, by limping or appearing increasingly bloodied, in order to remove the health bar from the screen. 
 
Increased Minigame integration - As mentioned above, minigames are typically an area where the player may feel pulled out of the game world, and reminded this is still a video game.  A way to combat this is better integration.  In Final Fantasy 8, for example, weapon upgrades were not accomplished through random loot drops or treasure chests.  Instead, players located manuals in the game world that provided instructions on how to upgrade their weapon.  They then gathered items such as screws that logically would be used to improve guns or swords.  Players then took these weapons to gun shops, which may or may not be located in a particular city, as one would expect in a real world. 
 
Fictional Brands - Games may improve the players immersion through the use of fictional brands.  This increases the lore and backstroy, and makes the world feel more believable.  For example, GTA: Vice City has advertisements on the radio.  Some of these products can also be seen advertised on billboards.  Eventually, you begin to really feel that Vice City is a real location, with consumer products and companies trying to sell them.  (See Fictional Car Brands for more) 
 
Hyper-Realism - Hyper Realism is a concept that can create integration. This refers to a game's attempt to follow real world physics and rules as closely as possible.  Many times this comes in the form of sports games.  Madden NFL 10, for example, made it much more difficult to recover onside kicks or successfully convert fake field goals.  These issues arose when players discovered that by using the kicking meter the same way every time, they could predict an onside kick.  In real life, however, this is impossible.  Therefore, Madden increased the randomness to make it less likely to occur, and more like real life.  Strategy decisions must be handled as they would in real life. 
 
It is worth noting that this frequently appears in shooters as well.  Some games realistically do not have health kits, and one or two bullets is fatal, as would be the case in real life.  Guns have realistic recoil, meaning that it is difficult to use a high powered, fully auto, rifle.  This fits with real life, where high powered rifles often have burst fire, just for this reason. 
 
Ambient Sounds - Ambient sounds are not part of the game's soundtrack, and not a 'sound effect' in the traditional sense of the "Boing" noise when Mario jumps.  Ambient sounds may be car horns from the nearby round, birds chirping in the forest, or NPCs having conversations when the player passes.  These help make the game world feel more alive and real. 
 
Presentation - As noted above, sports games that use trademarked graphical presentation, such as from ESPN, help give the feel that the player is participating in a game on live television, not playing at home. 
 
Notable examples: 
Shenmue: (I need some help here..) Shenmue was an attempt to create a fully realized virtual world, in the form of an RPG.  This game included a virtual kitten that the player could raise, giving the player mundane, but realistic, jobs such as forklift operator, and an average joe main character.  While this game never caught on due to both the Dreamcast's spectacular demise and the overwhelming job of creating a second world, it is an excellent case study in full immersion. 
 
Virtual Boy: Nintendo's attempt to increase immersion by cutting out outside distractions, the Virtual Boy system provided 3-D graphics and surround sound.  It failed, however, due to the lack of color and impracticability of the overall design. 
 
Second Life: An online MMO type game, Second Life attempts to be a virtual world that replaces the real world.  It has powerful creation tools to allow players to build anything they want, and repopulate the world their own way.  Second Life never really caught on, at all. 
 
Playstation Home: Playstation home attempts to provide PS3 users with a virtual "home" when they log into the online network.  Some notable attempts at immersion include arcade machines that only allow one user at a time, with the other users forced to stand in a queue and wait their turn.  Obviously, while pulling in some of the hassles of real life is great for immersion, it is poor for user enjoyment, and Playstation Home remains the butt of many an industry joke. 
 
The Sims: The sims attempts to simulate life itself, with players being forced to complete mundane, daily tasks such as using the toilet, eating, and going to work on time.  The Sims also attempts to track progress in a manner similar to real life, through wealth, job status, and number of friends. 
 
Major Figures: 
Will Wright: Will Wright is a legend in the simulation game design world.  Creator of Sim City, The Sims, and most recently, Spore, Will Wright's games attempt to accurately simulate real world situations, and draw the player deep into their world.  His games have complex simulation models that attempt to reflect real life.  For example, while a Casino in your city may bring in tourism dollars, it will also bring in criminals, forcing the player to make a tough choice. 
 
Brian Eno: Brian Eno is a sound designer who does work on game soundtracks.  Brian Eno is famous for working with Ambient Sounds which set the mood perfectly, increasing immersion. 
 
Phil and Dan Houser: The heads of Rockstar games, they are responsible for the Grand Theft Auto series, which pushes the limits of immersion through realistic world design, ambient sounds, and fictional in game brands. 
 
Related Terms: 
The Fourth Wall: The Fourth Wall is a video game concept that refers to the barrier to total immersion.  No matter what, when playing a game you are using a controller to manipulate a virtual world.  Similarly, basic tasks like saving can pull the player out of the game.  Games that attempt to "Break Down" the Fourth Wall may do things like persistently exist even when the player logs off, or may read the player's memory card and recite a list of their favorite games without asking. 
 
The Uncanny Valley: The Uncanny Valley is the horrible intersection between games and real life.  There is a point where a virtual representation can be so realistic as to be almost impossible to distinguish from real, but there is something so fundamentally wrong about it.  A good example is facial animations.  Graphics can represent human faces almost perfectly, complete with realistically animated hair and skin imperfections.  When animated, however, they may look slightly robotic and inhuman, giving off a creepy quality, and breaking immersion. 
 
"Gamey" A favorite term of Jeff and Ryan, they frequently refer to games as being "Too gamey."  An example would be a first person shooter than purports to be realistic, but then creates a contrived task such as finding the blue key to open the blue door.  This is a common game element, which pulls the player out of the immersive experience.