It could be about cost: big LLMs don’t work locally like most games, and even with server hosting, the context for a well-detailed and non-textual game would grow very fast, so processing it would become slow and/or expensive. These are the current limits for truly generative games.

As for generated content in regular games, I don’t see an issue if the content is high quality and free of errors. People don’t like low-quality content regardless of who generated it - human or LLM. It’s just that there’s currently more bad content coming from LLMs, that’s all