We have virtual worlds now. Second Life. Sansar. VRChat. Sinespace. High Fidelity. The technology is good enough that we can see what they're like. They're OK, but not compelling. They mostly appeal to people with too much free time. Like Everquest, in the early years.
We even know what a fully immersive full body VR experience is like. Lucasfilm and Disney have one running at Disneyland.[1] They have good cordless VR gear, good position tracking, and a custom-built space you can move around. The space is just blank walls with an occasional prop you can touch, and it lines up with the VR.
They have a neat trick to make the space seem bigger. It turns out that in VR you can get people to turn a little while they think they're walking in a straight line, if you slowly rotate the visual world. So you can make the players go in big circles and think they're covering a lot of distance.
This is close to the "holodeck". It works now. And it's just another Disney ride.
(Is Marc Andressen thinking of the Ready Player One model as a way to allow the real world to suck more while keeping the peons happy? Only the 1% have a good real life, everyone else goes on line and pretends.)