This only applies to some genres. There's a whole category or games trying to replicate retro feel. Cadence of Hyrule could come out at least 5 years ago. (reskinned necrodancer with new mechanics) Same for crosscode.
Another category are games where the impression comes from esthetics, not from tech improvement: Ori and blind forest, Hollow Knight, Rayman, ...
Then on an intersection of that are things like Katana zero. Sure, most fps games will chug as much power out of GPUs as possible, but that's not the whole world.
3. Its harder to pirate multiplayer games than single player only, thats why they ditched them.
I don't think single player games are high risk / low reward but the games industry is defiantly laser focused on high risk / unrealistic rewards.
Pretty is a design choice (or should be). Minecraft's low resolution works well with people who appreciate low resolution worlds, aka kids. Minecraft's true genius, intended or not, is being a game that grows up with the kid as they play.
You start off singleplayer by yourself just getting by in survival mode and you end up building massive city sized projects in multiplayer learning to co-operate on a grand scale. That learning process can cover 5yr old to 16yr olds.
Photoreal is going to become cheaper and cheaper so making an artist aesthetic is going to be more important for standing out than 'better' graphics.
1. Keeping up with latest technology (graphics) is important for games, as those create the first impression. It is difficult to market a game built on outdated technology.
2. The above means that making games gets more and more expensive, probably faster than the market expands (if it is still expanding).
3. Multiplayer games are more profitable than single-player games.
This means that getting funding to make a single-player game gets more difficult, as it may provide a very poor return on investment, if at all. Only exceptions are low-risk existing franchises, which is why we mostly see those in the single-player scene. The original Deus Ex, System Shock 2 or even Metal Gear Solid would be nearly impossible today as those projects would be considered to be too high risk / low reward.