Realism in games is, in my opinion, first dictated by how it fits into the games world, if it makes sense in its setting. Secondly its up to personal preference, the individual perception. The realism does not have to resemble our own, but only make sense within it its world. Though I would also argue that the game would benefit from basing aspects of its realism on our world to make it more relatable. Morrowind for instance is very alien, but all its workings, realism, and logic are partly based on aspects from the real world.
This topic somewhat blends into that of immersion (the suspense of disbelief, to be "sucked" in). One does not necessarily need to eat, sleep or feel the cold to be immersed, but in a game like Skyrim some would prefer it this way (myself included). To achieve this we will install mods that make the game more realistic in the sense that it more closely resembles the rules of our world. To what degree this is needed is, as said, entirely up to the individual, how they perceive it fitting within their perception of the game.
I was inspired by a video by Gopher, "Should Fantasy Games be Realistic?". He talks mostly about fantasy games, but I feel the question can be put to any game genre. Certain elements of any game have to be "gamy" in the sense that they have to contain certain mechanics that are established across game genres. By this I mean things like an inventory menu, control schemes, quest structure, world design and so on. Some games try to work around this, like the Metro games by displaying ammo on the weapon (among other things), but it is in general an accepted fact that normally does not retract from the experience.
But beyond this, to what degree should a game try to achieve realism? And how should they define realism? Should it be based purely on our world, entirely within its own, or a hybrid?
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