8th generation of consoles is an interesting beast. While it was a step up over what was offered by the previous generation, it was possibly the first time in gaming history that the leap wasn't big enough to warrant instant adoption. Sure, facial expressions are more detailed which means we no longer have to excessively rely on pre-rendered cutscenes as much, and Open World games no longer have to sacrifice visual detail for their massive scale. But generally speaking, not much from current generation looks light years better than what 7th gen could put out vs say, going from the PS1 to the PS2. In fact, a lot current gen games could be put on 7th gen level hardware and not loose too much in the process. The main improvements this gen have more to do with improvements made to RAM, architecture, and development tools than fancy processors.
I'd say the cracks of this started forming last generation. 7th generation ushered in the HD era, and was the biggest leap in technology we've had yet. But it showed there was still a large market for 6th era visuals as well. HD didn't become standard until later in the gen, and 6th generation was when 3D games really started to become fully realized, so it was good enough for a lot of more casual consumers. Just look what was out that generation. The DS and PSP were the most successful handhelds have ever been despite vastly weaker hardware (DS especially), the PS2 was still selling very well, even through most of the generation, and the best selling home console at the time, was an enhanced GameCube with a TV remote known as the Wii.
Even the HD twins themselves were elongated. 7th Generation had the longest lifespan of any console generation to date (8-9 years vs. the 5-6 of its predecessors), and even then, the PS3 and 360 still kept getting plenty of great games, including many AAA releases, even 3 years into current generation. 7th generation was the point where graphics were really becoming good enough for a lot of people, and adoption rates of next gen-level tech are growing slower and slower. That, and with consoles and AAA games getting increasingly expensive to develop, consumers are becoming less and less wowed by each new generation leap. Even now with current gen consoles fully in the spotlight, the best thing you can say about them is that they can finally do Open World games proper justice. There's still plenty of 7th gen era games that with a few improvements, can look presentable as current gen titles, it's a big reason why publishers still keep re-releasing games from that era and even 6th generation games on current systems. Hell, just look at some of the most popular titles this gen. Minecraft, Fortnite, Rocket League, Shovel Knight, Sonic Mania. All games that don't really have bleeding edge graphics, but are able to win over the hearts of gamers with gameplay and visual style alone.
Things are only going to get worse next gen IMO. While there will always be improvements made in graphics, how big of a leap next gen will actually be is looking pretty questionable. Even when PS5 and Xbox Scarlet arrive, will most people really sit and say "Oh yeah, I really need to upgrade right away!" Not really I don't think, many gamers and developers will still be fine rocking 8th gen consoles for quite a while before they abandon them, likely even longer than they did with 7th generation. At the moment, current consoles have more than enough power for everyone but the AAA developers who need to keep pushing the envelope. Even the comparatively under-powered Nintendo Switch is still good enough to run the majority of modern games and remasters at lower settings. I feel major improvements going forward will be focused more on AI, physics, etc. and even then, that tech will still be too expensive to be adopted by anybody but the AAA crowd for quite a while. So what I'm trying to say is, are generational leaps becoming less and less important these days?