I've seen people here argue we're at the stage of diminishing returns and that next-gen will be defined by higher resolutions and frame-rates. I think that's absolutely false. The Unreal Engine 5 demos is proof of this, it's some of the best looking gameplay we've ever seen and no one even saw it coming. It's photo-realism and it's not even doing any funny tricks, as Mark Cerny said "t
he idea behind this technology (Nanite) is that no matter how far you zoom into something no matter how close you get to something, you're seeing like the real world more and more detail". It's a good guess to say there are perhaps several studios already working on triple A projects using UE5 but it's a fairly new release so we won't be seeing such titles for another year or two (at worst).
It's also fair to speculate that there are several other studios working on next-gen iterations of their engines, Assassin's Creed Odyssey which I'm currently playing now looks gorgeous in 60FPS and HDR, although there flaws which are minor but noticeable to the trained eye, like texture and foliage pop-in, lighting bugs. The terrain, rocks and environments also lack a lot of detail at times but again these are nit picks, but my point is a game like this (and many others) could get a huge uplift through micro-polygon rendering technologies similar to Nanite and Virtual Texturing, it's also plausible to say that the Ubisoft developers might already be working on such technologies although I'm not 100% sure since it was announced that AC would be going in a different direction, there's also other studios as well like Rockstar who all their faults still go after bleeding edge visuals in all their titles.
We already can count on Sony's first parties delivering on next-gen goodness, look at what was achieved in terms of visuals on games like God of War (2018), Ghost of Tsushima and Last of Us 2, I do think we'll get that moment similar to last-gen when Naughty Dog revealed Uncharted 4 which is still one of the best looking games to date. Now imagine what such developers could achieve on hardware which is at least 2.5x more powerful and not bottlenecked by the CPU or the slow streaming speeds of clunky a HDD.
It's just a matter of patience, so many game developments and productions were hit hard by covid, which means a lot of delays. I do think we'll see some mind-blowing stuff by the end of next-year.