PlanetSide, oh how I miss thee.
There have been other moments of utter immersion since then, but PlanetSide was definately the first.
Piloting a Galaxy Dropship for an Outfit running 'black' ops (knocking out generators on enemy facilities, and draining power from other bases to turn them neutral - making them vulnerable to capture). Routine base drain was going on, when we got discovered by an enemy Platoon who had bound to the base to regroup (was an Armoured Assault [Tank] platoon regrouping to pull out more heavy tanks).
Despite being able to respawn elsewhere, grab a new Galaxy and fly to a new target the squad I was with had been so sucked into the immersion that they fought a bloody retreat out the base at which point I afterburned into a reckless landing right by the back door. For non-PS players, Galaxy's are huge and originally had massive problems of exploding when landing on anything that wasn't perfectly flat. Everyone piled in to the Galaxy which was now being hammered by the bases automated turrets, and burned out over the ocean as enemy tanks started to roll out the main gate.
Cinematic, awesome... until the point where the Squad Leader said "Alright guys, recall to Sanc [your empires main base], we're heading to Ish [another continent] to drain there". So after all that, we may as well have let them kill us and just respawned at the Sanc - it would have been quicker...