This is a common area of confusion amongst both game developers and players. Like many such confusions, its root cause is sloppy thinking. Video game worlds do not, in fact, attempt to mirror reality. Instead, they present their own limited worlds which are loosely based upon some facet of the reality with which you and I are familiar.
When people talk about realism in games, what they're really talking about is mimesis, which is (loosely speaking) the degree to which the presented world maintains internal continuity, within the boundaries set by the player's understanding of the game's fictional world. (I like to think of mimesis as "the degree to which something behaves like itself". Which is glib, but gives the gist of the idea)
To take an example from Roger Giner-Sorolla's essay Crimes Against Mimesis (which was written in reference to interactive fiction), the following would be a violation:
This is a tidy, well-appointed kitchen. On the table you see a
The chainsaw doesn't fit what we'd expect to find in a kitchen, and so it breaks the player's belief in the reality of the situation; or in other words, it breaks mimesis. (Randomly strewn coloured keys often had exactly this problem, in the FPS games being made in the 1990s)
By contrast, if the same scene was written:
This is a tidy, well-appointed kitchen. On the table you see breakfast: six fried eggs, a foot-high stack of pancakes and about a pound of fried bacon. A huge checked flannel shirt is draped across the chair, and on the other end of the table you see a chainsaw.
Now the player can fit the presence of a chainsaw into the reality of the game world; it no longer breaks mimesis, because we've given the player a plausible explanation for how and why the chainsaw came to be where it is.
This is the challenge in creating a game. It's presenting a consistent world where everything that's present is reasonable, and doesn't pull the player out of the world. It's fine to make things bigger or more exciting or not work using the same physics as the real world, as long as they work using the same physics as the game world. It's when established rules within your game world have bizarre exceptions that you break mimesis, and that people start complaining about a "lack of realism".