Immersion requires realistic and detailed visuals. It has to mimic the way real life looks and feels.
Immersion is dependant upon engagement, not visuals. It doesn't matter what something looks like, as long as you engage with it then you can be immersed in it.
Take a novel. A good book that engages you emotionally, whatever those emotions may be, feels immersive and you feel like you are in the world on the page. No visuals at all, and this works equally for all kind of books, whether they're sci-fi, fantasy, romantic, comic, or thriller.
Take movies.
Nosferatu is a grainy, black-and-white silent movie from the 1920s. Visually it is a filthy smudge compared to the super-crisp HD images we have today. I find it to be one of the scariest movies I've ever seen because it taps into my emotions better than something like
Paranormal Activity or
Sinister. I feel immersed in the horror because I engage with it more, not because it looks better.
Games are the same. Fancy, realistic graphics don't mean a thing if there's no engagement going on. I found
Morrowind to be much, much more immersive than
Skyrim because it felt like more of a real place and you learnt more about the lore of the world. It didn't matter that characters communicated with a text box or that half the world was shrouded in ash clouds to cover draw distances. For all of its visual advantages,
Skyrim was a far weaker game because it was less engaging.
I've just finished
Super Mario 3D Land again and it is one of th most immersive games I've played on a handheld in a long time. "How can that be when the visuals are so inferior to what a £600 PC could produce?" Because I'm engaged with the gameplay. Timing my jumps, knowing when to run and when to walk, deciding on whether I should take a Tanooki Leaf or a Fire Flower, the feeling in the pit of my stomach when I leap and see the platform start to move away from me just as I'm about to land, these are all things which immerse me in the game because I care about them, because I'm engaging with it.
Super Mario 64 still gives me that experience, and that looks like crap today.
Visuals are not important when it comes to immersion. Sure, they may help in some genres, but if your entire concept of immersion stems from the visuals then you are playing some pretty terrible games. Pretty, I'm sure, but terrible.
As an off topic side-note, I thought
Twilight Princess looked better than
The Wind Waker and
Skyward Sword. But that's just me, I prefered that art style.