Even before Crysis 2 & 3 came out, there were Crytek engine demos that were amazing. You never saw anything near that in the actual games because they were kept down by console limitations and aiming at lower end PCs to get as big an audience as possible.
Even with the high resolution art assets you could get for the PC, the levels and effects themselves had already been designed with small draw distances and enclosed areas so as not to stress low end hardware.
So while games could look as fantastic as the engine demos, they rarely do because not many people could run them. This might change with next gen consoles finally getting half decent hardware, leading to better games that can be closer to best the engines can offer.