I feel I really have to drop my two pence in for this one This is how I personally see it.
For one thing, why do some people find sprite art just as or even more compelling than the attempt at photorealism? The answer is that we find it aesthetically pleasing; it is a style, which is why we must understand the difference between Visual Aesthetics and the function of Graphics.
See, visual aesthetics are the way things are presented; what makes things look nice and charming. It conveys a message about the game the instant we look at it, such as Team Fortress being cel-shaded (and therefore probably going to be comedic) or Modern Warfare going towards Photorealism (to therefore tell us that it should be taken seriously). Like the how the colour of your food may affect you will to eat it, the aesthetics are vital for us to dig in.
Bad aesthetics of course means visuals that aren't compelling; bland boring environments. Lifeless animation (Fallout 3). Poor lip-syncing. Stuff that disconnects us from the media.
Graphics are the more functional; It is why the cast of Team Fortress have distinct silhouettes, so that they can be easily recognised from a distance. Even Bad Company 2 has some level of distinctiveness in the way the classes dress, such as the bad guy medic always having a red hat. But its a little more complicated than that of course.
Its how well the game can run; how much the system can render without appearing to chug and stutter. It also involves deciding the levels of contrast a game may have, so while TF2 has really easy to recognise team colours, Ghillie Suits in other games camouflage due to the lacking of visual contrast. It is the relation between the collision boxes and the actual in game meshes. Being able to see (Doom 3 failed this one pretty hard). Basically, its a lot of things, but if they were changed, it would affect the gameplay directly, aside from just the look.
Bad graphics in this regard can be a choppy and inconsistent framerate, Things that don't do as they should (aforementioned ghillie suits failing to blend with environment that it should), shooting a guy and the collision boxes having no real relation to the mesh (meaning a false hit/miss). There can also be cases of a game (Halo: Combat Evolved) looking great at 30fps, but then when bumped up to 60, and inconsistency in animation because the
models have been animated to 30fps, but the game is going at 60fps playing animations half of its speed. Basically, inconsistency is jarring.
In terms of aesthetics, its about good art direction. In terms of the functional part of graphics, it's about optimisation, and using the hardware to the fullest without going over the limit. Theoretically this means that a game like Kirby's Adventure can be more charming than Modern Warfare, but not as graphically impressive. It is the reason why Metroid Prime 3 looks a lot better than The Conduit, because it has made better use of the hardware.
I think its the difference between aesthetics and graphics; form versus function, that many people need to understand. The difference between the two and also the fact that they are both under the Visual category. and its not just a case of a game appearing in HD or having normal maps or a high polycount that makes game visuals. It's what pisses me off about amateur reviewers that suggest the 'graphics versus gameplay/graphics don't make a game' argument, because, as mentioned above, bad graphics would mean bad gameplay, and half the time, they mean visual aesthetics.
