Who does this work for? It doesn't for people with spouses and children. I can't be removed from the real world when my child wants my attention. How many hours of game play do you think the average family person might have available to them where they can just remove themselves from the real world?
Given all of VR's problems, the people who will play VR games seriously enough to spend money on AAA VR games will always be a smaller subset of the overall gaming population. It's never going to be bigger than what exists already. All these billions dumped into VR as the next big thing seem to miss that the VR market is limited by the problems the parent comment mentioned.
You could also ascribe the same issues for a parent who wanted to leave the house. In fact more so, since if I left the house with a small child, I can't instantly return if I become aware of some urgent situation. Yet, bars, pool halls, bowling alleys, movie theatres, restaurants, etc., etc., still seem to have survived this seemingly momenumental issue you are harping on about.
Couldn't you make the same argument against headphones in general? Those seem popular enough. I've even known people who used sleep masks and ear plugs when going to bed. Realistically, VR doesn't actually take you anywhere. You're still standing right there, and if a child or spouse needs your attention they can still raise their voice or even just grab you to get it. I don't think the immersiveness itself is much of a problem for most people, although there are certainly times and situations where you wouldn't want that because you need to be more aware of your surroundings.
It works perfectly well, to the extent that any single-player activity works with spouses and children. Source: I have a spouse, a child, and a VR headset.
I mentioned it in another comment, but this is what LBE (location based experiences) is all about. You're not just looking at a "game" you play, but a confined piece of content that you experience, like a game, like a film, like a TV episode, but none of the above all the same. It's a completely different medium for telling a story, creating
There's a lot of really cool, niche things out there right now - creators are exploring new ways to create art that maximizes XR's ability to remove a person from their environment (wholly or in part) and uses that combined with audio and video technology to create an interactive, immersive experience as a piece of art and/or storytelling.
But the issue to me is this: if you look at the history of technology and art or multimedia, tech has almost always chased the artists' vision. And this is the problem I see with all of Google's plays into XR. They're not saying to artists: "imagine you had a medium that allowed to remove a person from their environment, construct a new one around them, immerse them in it, and interact with your vision. What would you make? What do you need?"
If you want examples of this: Walt Disney's animation studio pioneered many animation techniques and technologies. That didn't come from engineers experimenting; it came from animators wanting to create something they couldn't, and engineers figured out what to build to realize their vision. Game engines have never added features for the sake of features, they are demanded by game designers to add something new to present a new experience to the player. Same goes for paint brushes, instruments, etc etc.
And that's why I feel a lot of VR plays struggle. They're engineers putting the cart before the horse. Throw money at creators, and figure out what they need to create.
It's also why some of the best VR I've experienced has come from LBE. It's content first, figure out the platform second. Monetization third (which is interesting, since it's a theme park ride model).
If there are two things that are absolutely certain in media: if the content is compelling, the technical side is secondary. And if the content is compelling, it can be monetized. All these VR plays are screwing up by focusing on tech and money over content, which is what actually drives people to spend their money and use the tech.
As for motion sickness; with modern headsets that's generally only a problem for games which move the "camera" in ways which don't match your movement in the real world. (Such as racing games.) There's plenty of content available these days which doesn't have that problem.
Space restrictions I agree are an issue. There are a lot of games which only really need standing room to work well, but even then it can be hard to find enough space close to your PC (since the area you're standing in needs to be completely free of obstacles you could hit with your hands). I think standalone VR partially solves this problem though by increasing the number of areas you can set up in. With Quest, for example, the area you're playing in doesn't have to be near your PC; that makes it way easier to find a space that's big enough.