Maybe we can agree on the point that immersion demands a certain coherent leitmotif. Some games resort to a comprehensible or surprising narrative, others focus on gameplay structure or the audio-visual experience.
As for the trees: Another interpretation of the sentence could be that it refers to the problem of validation in empirical science and, as JamesM already suggested, the possible divide between the world and our experience of it. The question at hand is what we actually refer to when we talk about the world. And how could we ever possibly validate that our answer to this question is the right one? And more importantly: what if there is no way of telling if the world is out there or just holistic experience? Would the question be pointless? Furthermore, the sentence could refer to our understanding of the concept of causality, a concept, again, deeply based in experience. But like with all these koans, there is not just one way of interpretation. They are designed to bring up many different topics according to the subjective point of view.
I agree that immersion happens in believable or at least imaginable fictional worlds. The more believable or imaginable they are, the easier it is to be drawn into the experience and to suspend your belief that the game you are playing is just another fictional work of art. But the line between being absorbed by narrative and rejecting it isn't drawn only by the size of the world you're supposed to dive into. Nor is authenticity necessary. Take the Super Mario series, for example. As soon as Super Mario Sunshine tried to elaborate a more realistic storyline, a more or less adequate representation of a real world problem, it became quite ridiculous. Some games simply just dwell on their gameplay structure and an abstract take on reality. Some others don't even have to come up with narration at all to be immersive. Maybe you didn't want to rule this out, but to me it seems that the system of rules in a game, its simplicity or comprehensibility is an integral part of immersion in games. The free transformation and abstraction of reality is another. But ultimately, Gears of War 2 is awesome :D ...
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