I get that it's tempting to say "we no longer have to program game engines, hurray", but at the same time, we've already done the work, we already have game engines that are relatively very computationally efficient and predictable. We understand graphics and simulation quite well.
Personally: I think there's an obvious future in using AI tools to generate game content. 3D modelling and animation can be very time consuming. If you could get an AI model to generate animated characters, you could save a lot of time. You could also empower a lot of indie devs who don't have 3D modelers to help them. AI tools to generate large maps, also super valuable. Replacing the game engine itself, I think it's a taller order than people realize, and maybe not actually desirable.
I'm paying $43 / month for 500mbps at present and there's nothing special about that at all (in the US or globally). What might we finally use 1gbps+ for? Pulling down massive AI-built worlds of entertainment. Movies & TV streaming sure isn't going to challenge our future bandwidth capabilities.
The worlds are built and shared so quickly in the background that with some slight limitations you never notice the world building going on behind the scenes.
The world building doesn't happen locally. Multiple players connect to the same built world that is remote. There will be smaller hobbyist segments that will still world-build locally for numerous reasons (privacy for one).
The worlds can be constructed entirely before they're downloaded. There are good arguments for both approaches (build the entire world then allow it to be accessed, or attempt to world-build as you play). Both will likely be used over the coming decades, for different reasons and at different times (changes in capabilities will unlock new arguments for either as time goes on, with a likely back and forth where one pulls ahead then the other pulls ahead).
Why not just have a simple, low-poly rasterizer and have AI fill in the details?
That's essentially the way that AMD FX and NVIDIA DLSS work today, although they do take fully rendered frames as input.
[1] https://en.wikipedia.org/wiki/Deep_Learning_Super_Sampling
[2] https://en.wikipedia.org/wiki/GPUOpen#FidelityFX_Super_Resol...