there has been improvement, but i think it's a case of the law of diminishing returns, each new effect seems to cost more and more resources for smaller and smaller results.
i think for me games that have highlighted great graphical effects:
-assasins creed 3: the whole running through snow thing was really incredible when i first saw it
-assasins creed 4: the water effects and the general level of visual spectacle that goes in with a massive ship battle
-battlefield 1: the addition of the mud effects for vehicles and weapons
-heavily modded skyrim- i once spent 5 minutes staring at the ants crawling over a tree stump wondering what mod it was made it look so good.
that said, hellblade takes the cake for me when it comes to modern graphics.
i think the thing is you don't need photo-realistic graphics to make a great game, for example the borderlands series don't look much worse on minimum versus maximum settings because of the way the style is implemented and regardless they're a fun series.
as others have said vr will be the next big step once it starts being implemented on a bigger scale (ie basically every title having a vr mode), and especially once we figure out better ways of being immersive (ie requiring people to run, jump, carry objects etc) without the limiting factors of space as is current (my bet's on some kind of automated treadmill and robotic force feedback arms to simulate carrying objects, of course that would be mega expensive with current tech)