I think the trouble here is the use of the words.
Simulations, by very clear and direct definition, are games that attempt to represent real-world actuality as closely as possible. Hence, a combat simulation would not involve "hit points" or "armor class". Health would be guaged by the lethality of the weapon being used resulting in a single bullet most often disabling or neutralizing a target, and the player would have to take into account things like muzzle velocity of a rifle, bullet drop, and coriolis effect over longer distances. Flight simulations do not work based on "left/right/up/down", "afterburner boost", and "waiting for missles to reload". The player is responsible for controlling individual flight surfaces, managing fuel levels, and many modern combat engagements will be won or lost before visual contact is even established.
That's what "simulation" means. Yes, it's perfectly possible for games to have only lite sim elements coupled with purely fantastical game mechanics, and most games will fall into this category. But, by the definition of the word, any game that describes itself as a "simulation" will be focused on handling things with an extreme level of practical realism.
Cyberpunk 2077 does not even remotely attempt to do this. It does look realistic -- definitely! But that's just the graphics. The game itself is in no way, shape, or form a simulation of anything. It's a role-playing game set in a wildly imaginative, sci-fi setting with various mechanics focused on creating fun, approachable gameplay.
That's only true as long you count player interaction with weapons, cars and such items.
On certain aspects it's actually opposite to your take on game. Gangs of the Night City, some of them have quite outrageous look, yet how gangs work, down to internal issues of gang culture are very accurate compared to real life and address environmental influence and other behavioral patterns.
Collapse of social fiber, I have some books about that in my shelf, considered cornerstones of that subject in academia. Now why is that collapse happening? I have more books about that again related of cultural and economical aspects of that and those sure as hell ain't no pamphlets either.
It could be asked if player character input is required to make that aspect simulation, where answer with population of Night City is very same as in major cities around the world IRL. No, it's not required as individual without any sort of organization or even with such, doesn't matter on scale we are talking about.
Where the real breakdown will occur with the question posed here is with the use of the word "immersive", which has several valid definitions, each of which can mean something totally different from one player to the next. I use it to mean: "I feel like I'm there, in that world. I can readily suspend my disbelief and willingly forget that I'm 'playing a game'." Hard to do with something like Candy Crush, Plants vs. Zombies, or Super Mario Bros. Much easier to do with something like CP2077, Mass Effect, or Skyrim. (But that doesn't make the game a "simulation".)
Super Mario is very good example as it's the recognized brand globally and Mario being most known character. It's interesting question if Super Mario and other related games, such as Mario Kart are the very pinnacle of games as a form of expression. I sort of hope not, as thinking of classic works in realms of fiction,
Animal Farm by George Orwell, some animals are more equal than others, yet depending from other things and when it was written one can also ponder about Leon Trotsky / Stalin. Actual history and share that with other people.
Meanwhile, Super Mario as pinnacle of games, has achieved... being popular culture reference and besides that, absolute fucking nothing.
Suspension of disbelief, what this discussion isn't addressing at all, is a matter of different goals and motivations. Adult people are willing to read a fairy tale, even consider that as a classic as it can describe something about our real world.
Now that is the divider, work of fiction that can break that barrier, even a video game, people are willing to suspend their belief for that reason, that can be perceived as gripping, captivating... even breath taking (God that felt good to type) but it's all describing experience of short term addiction. Some of us are wired for that and we can be perfectly conscious about things like in car view in game, steering wheel isn't turning anywhere near like it should. Unrealistic but convenient as it synch with gamepad quite nicely and less convoluted design allows us to pay attention to what is around us, as all that adds to what we are experiencing on higher level. So nobody is complaining, nobody wants to make that more realistic, as that would form an obstacle to access content on that higher level, with input methods available for the most of user base.
There are then lots of details in gameplay and story aspects of game that adds more to that, sucks you in.
Real word, I think it's perfectly possible to not appreciate covering very realistic scenarios and perhaps someone writing in this topic manages to make that game one day. Part of reality, kind of sad, if higher level of story and it's importance for suspension of disbelief is only seen as users congratulating themselves, for one reason or another, but yes. Mario Bros would be pinnacle of games as a form of expression. A lot about mere distraction.
