It definitely looks worse and unnatural, because in real life we don't see rocks or trees gradually morph into the ground on a gradient (unless we're on drugs). Where it looks better is in motion, when the harsh rigid angles would otherwise show off their jagged pixels. This blend technique is used where your eyes are hopefully not focused. If only seen in your periphory, the effect is quite nicely done.

I agree that it looks bad close-up, but then if you think about the gameplay in that area, you are mostly just walking around and talking to other inmates and not doing much sneaking there, so you aren't up close with the edges at ground level, because you are mostly upright. I remember that area feeling very sandy while I was playing it so I guess the goal was achieved.

I've never liked the sharp object transitions typical of video games, but yes, I think that this technique only really works in specific circumstances.

I think it'd help a lot of the terrain geometry were distorted such that it looks like it's physically interacting with the object it's blending with (e.g. sand resting against the side of the object). If that were added to this technique I think it'd be a lot more convincing.

When I first looked at the images, I had the same reaction that they don't look realistic. Thinking about it in context though, I think they would be more suitable. The goal of these renderings isn't specifically to have properties that are realistic. The main goal should be for them to make the world seem natural and provide context. In that sense they are better than the sharp renderings which are a bit distracting. In a way I would consider them a bit impressionistic to give the player the right impression more so than an accurate frame-by-frame renderings. The true test should be playing the game with different renderings and deciding which one feels better.

Video games are all about visual tricks that make them look more pleasant and not as much about physical realism. This looks much better in context when moving vs. the jagged original approach.

I wonder if anybody can relate to my experience. Maybe it is just me showing my age but though I agree the visuals of modern games have become, much, more impressive I much prefer the older style. Deus Ex is a good example. The original, maybe my favorite game, shows it age. Even at the time it wasn't the most impressive looking game. The environments are simple, must edges perpendicular etc. But it made everything very clear etc. It seems it was more easy to parse for me. Deus Ex:MD looks gorgious, but there is so much going on, everything looks so complex and cluttered that it feels way to busy for me. Also there is often a bluriness to modern games, I cannot quite put my finger on it but it seems it was filmed with a lense covered in petroleum jelly. I much, much rather see jagged edges.

That bluriness might actually be the anti-aliasing, TAA specifically. Pcgamingwiki often shows how to replace it with smaa because of that. Doesn't annoy everyone, but some it does.

Yeah I had the same feeling around the time MD was out, I think it was fixed by 4k and a bigger TV

I think it was the lighting, everything is so shiny and reflective gave the modern game this weird dreamlike feel whereas the original (also my favourite game which I replay every few years) feels dark and gritty

I agree with both arguments: In my examples it doesn't look natural (and having such a boring box is really a worst-case but serves well to show the effect very clearly), but on the other side it must be seen in context (like others said before). While nature doesn't have "translucent" materials, this soft edge can be interpreted as a transition you can often see in the real world: be it, that a little bit of sand and dust from the ground sticks on the base of the object or just a variation of the ground-height which avoids an unnatural straight line between the two "elements". It is of course a hack, and it doesn't work perfectly fine when looking so close at the box, but in my eyes it works very well for e.g. the stones. Unfortunately, I wasn't able to overwrite the shader to disable the blending in the game. I'd have loved to show how Deus Ex looks Without this effect.