The Guardian Gamesblog has an interesting article about immersion in games, talking about the importance of getting the details right to make a virtual world believable. They quote an article by Toby Gard in Gamasutra, where he says: "When a player enters a temple that has no space for worship, or a tomb with no burial chamber nor rhyme nor reason behind its layout, he or she will not be convinced that they are exploring a real place. The worst starting point for a level is a series of featureless, functionless boxes joined by corridors into which gameplay is inserted from a list of gameplay goals." But they also quote a scientist working on immersion in video games saying "We have to be very careful with terms, because a game that's very immersive is Tetris, but there's no sense that you're IN the experience." So how come a game like Tetris is so immersive, if there is no realistic environment? And how come people get immersed in World of Warcraft dungeons, whose layout usually makes no sense at all?
What I think is that people are mixing up some very different terms: immersion, realism, and flow. Flow is defined as "the mental state of operation in which a person in an activity is fully immersed in a feeling of energized focus, full involvement, and success in the process of the activity". Good games produce this mental state of flow, where the player is fully concentrated on the game. Tetris can produce flow. But it is easy to see how being in flow, and being "fully immersed" in a game, have very little to do with realism, and a lot to do with the quality of the gameplay.
I used to get into heated discussions with some friends about realism versus gameplay. That was in the 80's, and we were discussing whether pen & paper roleplaying rules should have complicated hit location tables, and other "realistic" rules like that being wounded would cause you to perform worse in fights, or even incapacitate you. If you look at both the more popular pen & paper roleplaying systems and MMORPGs, it is obvious that the gameplay camp "won" that war. I'm not sure I ever played any MMORPG in which a character low on hitpoints would fight significantly worse.
The reason why gameplay won over realism is that people play games to *escape* from reality. Real lifes are significantly more boring than virtual adventures. And combat in real life has a lot of rather unattractive features, which is why most people tend to avoid it. Being shot in real life just isn't fun. Thus the more realistic you make a game, the less fun it is. Taking certain liberties with reality is absolutely necessary for a game to succeed. Having somebody with 1 hitpoint left still fighting at full strength, then dying on the next tiny damage he receives, and later being resurrected and at full strength within minutes again is not realistic. But attempts to make it more realistic would probably make the game more tedious, and inhibit flow. Would you really want to play a more realistic MMORPG in which your character has to go the toilet from time to time?
Most roleplaying games have significant parts of gameplay taking place in dungeons. Monsters are placed in those dungeons, usually well within shouting or visible range from each other. The realistic thing to happen once a group of adventurers enters the dungeon and attacks the first monsters would be for them to shout out, and the WHOLE dungeon population to arrive at the entrance a short while later, slaughtering the adventurers. Why would a "boss" even have so many armed guards placed everywhere if their goal wasn't to drive out intruders? But in terms of making an enjoyable game, that realistic option gets you nowhere. Thus all those guards only serve a "trash mobs", as spacers between the "real" fights, the boss battles. A dungeon in which all monsters are at fixed locations and can be fought one by one isn't realistic at all, but it makes for an immersive and fun game.
Thus I'd challenge the idea that immersion has anything to do with realism. To become immersed fully into a game, you need to get into that flow state of mind, and that depends on gameplay being smooth. Realistic touches to the decoration are fine, but a level of realism which hinders smooth gameplay enough to break the flow is deadly. Thus game designers opt for smooth gameplay. They sometimes can explain away question of realism with "magic" or "advanced technology". But you only need to cross a continent from coast to coast on foot without any magic or technology in a virtual world to realize that you can do it in an evening in the virtual world, while in the real word it would take way longer. Realism in games is about getting the decorations right, not about be anywhere close to the real laws of physics and biology.