I don't know how to answer this other than to say effective media succeeds in building atmosphere that we're not necessarily privy to.
The whole appeal of scary movies to get scared even though we're in the safety of a movie theatre, our home, or a friend's home. The whole point of seeing an action movie is to feel a rush even though we're not jumping out of a plane or speeding down a highway. Games should aspire to do the same.
And this isn't some new AAA-centric approach where they all want games to be movies anyway, no. Games strove for atmosphere all the way back in the 8-bit days. And some of the best indy games with small budgets today will rely on atmosphere to carry the experience when budget restraints hold them back in other ways.
Hell, let's get out of the realm of visual media. Written stories have thrived by their ability to create atmosphere. I recently finished a book called It Came From Neverland, which was attempting to marry the Peter Pan mythos with Stephen King style horror. The plot is basic, but is carried by the author's ability to make you feel unsettled by Peter's lurking presence. I'm going to leave the examples at one because the number of written stories that succeed because of the author's ability to transport you to a different time and place through atmosphere are far too numerous to count.
If a game didn't care about this, it would just be a featureless series of hallways with a blank character icon and no music and they'd just want you to solve the puzzle.
The effort going into character design, level design, NPC and enemy design, music, even menu design and control scheming, is all meant to put you in a certain mood.
"But I'm not isolated in an abandoned space station/mine/whatever."
Yeah, and I'm not really at Camp Crystal Lake, but I still marathon the first six Friday the Thirteenth movies every year because they're effective at setting that tone and mood.
