That's the real answer, it's compromise and priorities. Modern hardware could do 16, 32 player Mario Kart 64 on a single machine easily, but the manufacturers set a minimum for visual fidelity that the hardware cannot handle.
Recent examples are some of the Switch console sellers (Zelda and Pokemon), both of which have framerate issues. Not because the games are that pretty (personal opinion), but because their developers did not prioritize performance.
Yes. Though keep in mind that developers only have finite resources (and that includes latency, ie calendar time until they need to ship). So if you prioritize performance, something else gets less attention.
It's up to you as a player / customer to decide whether you like the trade-off offered.
Recent examples are some of the Switch console sellers (Zelda and Pokemon), both of which have framerate issues. Not because the games are that pretty (personal opinion), but because their developers did not prioritize performance.