The Cyberpunk 2077 trailer is a rendered video, and it uses performance capture technology. It is not a polished cutscene, made by using the game engine. Now, having said that, game engines have come a long way. You can go to Youtube and get a glimpse of what the latest game engine demos look like. Some of that stuff is pretty mind-blowing. For example, check out the demo labeled "Kara" (this isn't an actual game engine, although it is an "engine", not rendered video), or CryEngine3, or Unreal Engine 4. Remember to set HD on (720p or 1080p if it's an option.)
Still, you have to keep in mind, that almost all demos are still polished and customized, in the sense that nothing will ever look quite as good in the actual game. It is much easier to run a specific cutscene where there's no variance, where all the actors do exactly what you want them to do, and get it to run smoothly at high FPS rates, than when you're talking of a game where the player and the NPC's can move erratically and utilize the entirety of the scene, as well as interact with any moving parts in it. Then you can't control the FPS rate as well anymore.
Rendering technologies and 3D modeling and drawing will advance just like game engine technologies do, so a game will most likely never look as good as rendered video from the same era.
However, that's not to say the new Red Engine won't be pure eye candy. At least hopefully!
