How comes games aren’t that scary anymore...

How comes games aren’t that scary anymore? Is it because graphics have improved to the point where nothing is really left to your imagination? I recently replayed silent hill and found it to be just as disturbing as when I first played it. Every newer horror game I tried hasn’t given me the same feeling. The only exception was condemned on the 360.

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There's been many discussions about this very same topic in the past, and most people have gotten to a similar conclusion.

In short, yes - it has something to do with graphics, as well.
Essentially, I believe that there's a heavier atmosphere and more "magic" to older video games, because the primitive visuals make your imagination run wild, "filling the gaps". SH1 and the Tomb Raider 2 are perfect examples; even today, I can play these games and still dream about what's beyond the hills outside the mansion gates (which is a 2D wall, but whatever), but when I play some Uncharted / TLOU type of game... I don't ever think about that. I can clearly see what things are supposed to represent, and even where the explorable game world ends.

Immersion is all about getting the player feel like he's "in the game", instead of observing a pixel-character moving on his screen. Perfect immersion is achieved by making the player's imagination do the heavy lifting, creating more content and context around the game's world than there's actually present. This is how the books captivate readers as well.
All this is especially effective and important in horror games; Silent Hill 1 on PS1 may not look that great anymore (even if it's visually quite high-end considering console's hardware), but the mixture of beautifully executed visual-design and the stunning sound-design (which is easily THE most underrated aspect of game-design) create this haunting atmosphere.

This is why I can't always agree with "good graphix = better atmosphere and enjoyment" arguments, because showing EVERYTHING < showing little but teasing about the possibilities.
Sure, there's some gameplay aspects to all this as well, namely how much handholding modern shit always has, killing challenge and feel of adventure.

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Resident Evil VII was pretty spooky to me.

And I found it very predictable, tame, and outright boring.
I don't think it had a single original idea, and no real surprises either.

I wasn’t expecting this well thought out response. You hit the nail on the head.

Horror is difficult to do right. Most developers just spread jump scares throughout a game and call it a day.

ZOMG GUISE ITS LIKE THE PIXELS AND YOU FILL IN THE GAPS

EDIT: THANKS FOR THE REDDIT GOLD KIND STRANGER!

Zoomer enters the thread

You can also blame the requirements of modern games, such as auto-checkpoints. SH, like pretty much all PS1 games had fixed save points, which added to the tension and fear knowing that if you die you're going to have to do it all again. Modern gamers expect the game to reset you to when you opened the door to the very room you died in.
If you tried to reduce the frequency of checkpoints people would just call your game bullshit, artificial difficulty, tedious, etc. etc.
Also item highlighting and button prompts remind you you are playing a video game with unsurprising mechanics. You don't search a room, you look for the hotspots and press X.

I've always struggled to put it into words why I feel like I get immersed easier in games that aren't super high-def or realistic. Fantastic post