The uncanny valley is a dip in a curve showing how people react to images showing humanoids that are more or less similar to real humans. The idea is that people react well to real humans and to humanoids that clearly aren't real, but somewhere in the middle there is a valley, where people react with revulsion to almost-human things like zombies. I don't know if it is only that, or if it is just a factor, but for myself I noticed that I clearly prefer computer game graphics that are a bit further away from photo-realism. Or in MMORPG 2014 terms, I much prefer the look of Wildstar to the look of The Elder Scrolls Online. A decade back I much preferred the look of World of Warcraft to the look of Everquest 2. I prefer candy-colored worlds with characters like pink pigtailed gnomes or characters with bunny ears to worlds using only shades of grey and brown with characters that all look human. I also like cel-shading and other means to create a more comic-like look in games.

Besides uncannyness, I also see an advantage of a less realistic look in terms of the user interface. For example TESO has an ongoing discussion where players complain that they don't see the effect of hitting an enemy very well. If you have a game where hitting an enemy causes floating damage numbers to fly away from the mob you hit, you don't have that problem. But those floating numbers are clearly better suited to a comic-look world than to a photo-realistic one. In Wildstar every attack has an area of effect which is painted in color on the ground, which in a world full of colors looks quite okay, but would break immersion if your immersion is based on things looking "real".

Furthermore a less realistic look is often easier to achieve, especially with animations. If your character is supposed to look very much like a human, you need to get human movements exactly right for that to work. If your character looks like a stuffed animal, its animations can be a lot simpler and still look good. A mono-colored surface without texture can look okay in a comic world, but looks strange in a photo-realistic one.

Maybe it is just me, but I can easier get immersed in a game when that immersion is just by gameplay, and not by the game pretending to be a video-camera. I don't know if that would change if I was using virtual reality goggles instead of a flat screen. What do you think?