Like obviously no real person would be able to survive the injuries my character gets every 10 seconds. But if I was dying all the time it wouldn't be fun to play.
The one thing that really bothers me, as far as realism goes, is lack of persistence. Leave a car somewhere, walk 10 feet away, turn around, and it vanishes. Cars and NPCs vanish when you aren't looking. Damage you do gets quickly reset as if it never happens. And a number of small details like this. It's not just that it's unrealistic, it really limits what you can do with an otherwise awesome sandbox.
Still, I think the game that deserves most credit for realism is dwarf fortress. It will be a long long time before AIs master that.
If the game randomly JIT generates all local phenomena while keeping just enough coherent higher level data to suspend your disbelief, that's only the storage size of the high level information.
However, when a player begins to specifically perturb that generated phenomena at the detail level, how do you prevent leaving an ever-storage-requirement-increasing trail back through the player's space-timeline? Reconvergence to normal over a reasonable timespan?
I assume this is a thought about problem, so links greatly appreciated!
Look into confirmation bias