You are entirely right unfortunately.
Looking back at the early days of the ps360 gen and seeing all the natural motion stuff and watching dev vids on wood that would snap and break realistically, even depending what type of wood it was (can't remember now what that Middleware was called)
Even games that weren't all that hot like alone in the dark reboot/make had interesting mechanics which you could imagine in better more capable devs would have been great. Like metal bending when shot, fire propagating and burning wooden objects gradually
I know Rockstar bought natural motion and their euphoria tech but still, it just feels like gaming in general has taken many steps backwards in this regard
Edit: this was the tech demo I think, digital molecular matter. What a cool idea
I can't do much with the Star Wars franchise, but the physics feautures were the reason I played and liked it on the 360. I also remember From Dust, a small, innovative god simulation from Ubisoft (I know, ubisoft and innovative? Don't go together anymore), where you could terraform the environment to protect your people from lava flows and tsunamis.
It may not be as impressive today, but the gameplay was so special that even over 10 years later this little title is still stuck in my head.
The physics of some games from that era, or even before, like HL2 (2004), Far Cry 2 (2008) or Crysis (2007) are on par with current releases in terms of physics implementation. How many palm trees and bushes did I "chop" in Crysis, start wildfires in FC2 and shoot junk with the gravity gun?
With the "full hd" generation, the focus shifted from gameplay to mirror finished looks. It's time for that to change again.
The visuals are fine since the end of the last generation when I look at games like RDR2, TLOU II, GoW, CP2077, GoT, RE2 remake etc. Now use these basic frameworks to bring in more interactivity with the game world, more immersion through interaction.