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Imagine if they used all that resources in do... Fun gameplay. Not trying to be a movie or a simulation of real life. Like just gameplay. 100% gameplay. A game who is not a playable movie. A game with just gameplay. Like a real videogame.
Simulation systems can be very useful assets for fun gameplay, if you make a game that can make use of them. Immersive Sims are essentially all about this. They create a bunch of systems that can interact in all kinds of ways, and then they let the player figure out how to make use of them in whatever way they want.
The issue is these games are just making these systems without any way to take advantage of them. If the nails being long made you better/worse at things, and the nail clippings could be combined with other items to make potions or something, it could actually be a cool mechanic. Just doing it for "fidelity" isn't useful though and usually just a waste of time/money/effort.
Rimworld is a good example of the depth of simulation making for good gameplay (also dwarf fortress...)
It can also make the incredibly tedious and irritating. Elite Dangerous is an incredible simulation of our galaxy that has terrible gameplay for your average player.
The simulation isn't the reason for that. That's just the design of the game. Plenty of people enjoy the Truck Simulator games. Elite is basically the same thing, but for space. Also, I wouldn't call it a "simulation" of our galaxy, but a simulacrom or representation. It's not changing. The groups expanding and building in that, the economy, and those systems are simulations, and they actually provide content for the game, regardless of if it's enjoyable in your opinion.
Simulations that create content are when we should create simulations. Simulations that consume resources and don't enhance the game should be avoided.
My personal theory is that it boils down to how many people it takes to make games (too many to be useful imo). This is probably a sympton of
"hey, what feature can the new guy work on?"
"idfk make him add toenails or something"
True. I never was able to work well in groups, imagine a work of more than 500 people.
Like those in-game cosmetics that cost real money but represented by a type of in-game currency that can't be earned by playing the game, instead playing your wallet.