I haven't been blown away by graphics much in the last few years but plenty of games still look good to me. I can play some games where I think it does look outdated but some of the latest games still look amazing to me. Devil May Cry 5 is probably the most impressive game I've played this year, the people in that game do look amazing and quite realistic. Red Dead Redemption 2, Horizon ZD and GOW still stand out for looking incredible.
Graphics in screenshots are definitely experiencing diminishing returns. I still think there is a lot of meaningful improvements to be made but it could be a slow road ahead of us. To a lesser extent I think the same thing applies to cutscenes. Death Stranding has some incredible looking faces at times and with mocap there is already an "objective source" to drive the scenes.I do agree with that, set pieces and dynamic environments are definitely the most impressive technology to behold in games, and they produce the biggest wow-factor. The physics in BOTW for instance constantly blow me away with all the random shame you can do in that game.
Dynamic gameplay related elements have the most room for perspective shifting improvements imo. Examples include vegetation reacting physically to movement instead of faking it, high res fluid simulations for water interacting with the player and land, better AI, procedural audio, destructive/reactive worlds, npc variation, improved dialogue driven animations, etc.