Better graphics mean more detail and more complex effects. Every detail and every effect needs to be computed in a short enough time for each frame (so, in 1/60th to 1/30th of a second). Rendering a model with 20 polygons is easier than rendering a model with 2000 polygons. Calculating the approximate light level in the area is easier than calculating exactly how the shadow of this 2000-polygon model will fall onto the environment. And so on. The faster the computers get, the more of these calculations you can fit into 1/60th of a second. Methods also improve, but that’s a different story.
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