Since there’s some confusion surrounding the concept of diminishing returns, I’ll spell it out.
Imagine you have an electronic device that runs a game (PC, console, whatever). It runs the game to some degree of success, but it’s not a good experience because the hardware is too weak and you have to play at the barebones minimal settings. Low framerate, low resolution, visual details are turned down, basic shadows, all that stuff. The game barely runs.
Now imagine your system is twice as powerful, and you play that same game. You can now turn the settings up to medium/high, and the game looks and feels much better as a result, with all the visual effects looking more or less how they were intended to be played. The relative improvement is significant.
Now imagine your system is twice as powerful as
that. You can now go up to ultra high settings, which is an even better experience. Not as big as the previous leap, and not something you really
needed, but still nice.
Now imagine your system is twice as powerful as
that. You can finally turn up those last two settings that were only on high before. Sure, it technically looks better; the hair follicles on the back of that one NPC’s neck are slightly more visible than they were before, but who gives a shit? You’ll probably take an upgrade like this if there are no downsides, but it’s not something you’d go far out of your way for.
Now consider that each system I mentioned is more expensive than the last, with the final system being significantly more expensive than its predecessor despite the relative upgrade being much less significant. That is diminishing returns. It applies to any and all specs. Some people need to play with every possible setting maxed out, some people reach the “good enough” point around 1440p and a steady 60 FPS, and some people
really don’t care and will take 720p/30 as long as they can just play the freaking game. As visual fidelity - and price - continue to exponentially grow, it passes more and more people’s “good enough” point, and the ”quality of gaming experience”-to-price ratio diminishes.
Or for a more fun comparison, here’s how it feels when you upscale an old system through emulation, especially 3DS:
2x: “

this changes everything, I’m never going back to native resolution!”
3x: “that’s a pretty good improvement, worth the extra power”
4x: “I guess it looks better if I squint hard enough…”
5x+: “who even cares anymore”