The thing that developers don't understand about immersion is that it's not about the graphics but the gameplay, storyline and interactions.
To this day, the most immersive game that I've ever played had (by todays standards) horrible graphics and a remarkably simple interface. However, the map was GARGANTUAN, the NPCs were crafted with a mastery that I don't think has ever been exceeded and there were artifacts scattered all over the map. Places that you could go were so big that they themselves had large maps and there were SO MANY places that you could go. I would say that it was the greatest game that I've ever played except that its successor was even better.
It came out in 1986 with its successor coming out in 1989. Among long-time gamers it has a near-mythical status in what it was able to do with the technology available at the time.
The name of the game... is
Starflight. Just try to imagine, with 1986 technology, this game had 270 unique star systems (including Sol, if you could find it) with 800 unique planets. Many of these stars were hidden in various nebulae which meant that they weren't on the starmap.
There were 11 races of star-faring beings that were completely dissimilar from each other:
Human (Mammalian), Velox (Insectoid), Thrynn (Reptilian), Elowan (Plant), Mechan (Synthetic), Spemin (Protoplasmic), Gazurtoid (Aquatic), Uhlek (Amorphous), Minstrels (Space-Born, Emotional), Mysterions (Space-Born, Logical) and Ancients (Mineral).
There was a starport with multiple departments, a terrain vehicle for exploring planets (and the planets were/are just huge), ship-to-ship combat with hostile aliens using lasers, missiles, (for the uhlek) plasma bolts, terrain vehicle-to-hostile creature combat during planetfall with a stunner and a laser, commerce and humour.
Starflight guaranteed literally
months of great gameplay (even years if you wanted to find and do everything). With all that it had, it was astonishingly small. Starflight was only 720kB in size and was distributed on two 5¼" floppy discs. Immersion doesn't require great graphics, it requires great intellectual captivation.
Its successor, Starflight 2 - Trade Routes of the Cloud Nebula, was a massive step-up in graphics, story and gameplay. It was literally twice the game that Starflight was, which made sense because it used a single 1.44MB floppy disc. Just try to let that sink in for a second. It still blows my mind to this day.
I had the good fortune of trading emails with Rod McConnell, the lead programmer of the Binary Systems programming team that made this early EA title. The thrill was similar to that of talking to Roberta Williams of Sierra On-Line. You could just tell that this person was an absolute genius.