Epic have made some incredible breakthoughs with Unreal engine and are definitely leading the pack with capabilities, but as
@inflationunit said above the tech demos are basically always a "best case" scenario, showcasing very small projects specifically built to show of what could be achievable. For developers to create full blown games using the full capabilities of the engine still takes a huge amount of manpower, time and hard work as well as skill in creating the models, textures, animations, environments, soundscapes etc. and a great deal of knowledge which the majority of game dev companies simply don't have or can't afford.
With Nanite, Lumen, Metahuman and more the capabilities of the engine to create photo realistic environments and lifelike animations even on lower end systems is crazy, as developers become more used to working with these tools and begin producing content that utilises it well the only way I can see the gaming landscape improving now is in 2 distinct area's.
The first area is player input, there have been some interesting steps taken by different companies in this regard like motion sensitive controls or the case with Sony's ps5 controller with adaptive triggers (when a game uses this well it's barely noticeable until you try and play without it) having variable pressure on the triggers can really change the way things feel, but it's still a control pad.
The next step here would be "controller free" input, we have already seen this idea with things like the Kinect but not fully realised in any incarnation yet but something like this coupled with a haptic glove/suit that can allow you to feel not only pressure or vibration but also give sensations of wetness, temperature and texture of objects in game across the while of your hand/body.
The second area is in how we experience gaming, which would most likely come in the form of VR, VR headsets are improving and capable of some cool things but can still be clunky, heavy and uncomfortable for long periods with not quite full perspective views and need fairly large clear spaces to play in. Something that can completely fill your vision with full 3d audio can allow you to feel as though you are no longer in your home watching a screen but actually a part of the world you are playing in.
The end goal here would be TIG (total immersion gaming) where a headset could send and receive neural signals allowing a player to sit in a chair without needing lots of space to move around and feel fully like they were in a different world, with full body feedback to feel what you are doing. This is still a very long way off though and would bring it's own share of problems.
