Graphics are important part. And the "core" simulation part doesn't take that much in fact, all goes down to optimization of code. Falcon 3.0 was running on what, 386DX processor? Now more computing power has every cheap smartphone-wannabe. Falcon 4.0, I remember playing demo on my Pentium 166Mhz with 32MB of ram and Voodoo 1. Was it bad simulation? No, it's still perhaps among the best as F-16 systems modelling goes. Similar case with the forgotten JSF, remember the quality of terrain masking and ground environment in that title? Still ahead of what the our most popular series here has to offer as far as ground environment goes I played that one on even older Pentium 90 with 8 MB of ram. DID's titles are another example of (then I admit) high fidelity simulations running on ancient computers by todays standards. But, in my own biased opinion, we aren't much more HiFi as systems modelling goes these days. Recently I was suprised how in fact survey, or "lite", and innacurate in avionics modelling, Flamming Cliffs 2 are. DCS series seem only one modern example of real high fidelity titles around, but I haven't played them, so can't really say.
Xclusiv is right about the money, the example console title (Ace Combat6) mostly rely on high resolution satellite data which costs a lot of money. So-so quality 2x2 kilometers picture for commercial use costs around 90-100 dollars up, as I found myself.
@Squid: we're talking flight simulations, not women here