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This is actually quite an interesting discussion.
I don't really have a problem with games that don't care about internal consistency or historical realism. D&D being the prime example. Of course some things are silly, but the spirit of the game is to be like Elminster, going from a lowly wizard to a near god. That's good fun and that's about it, all good. But games that aim to be ubber realistic and then fall really short of doing it, now that's a different thing. Take Twilight 2000. Even back in the cold war when it was released, the setting of the game made no sense at all. That's not, at all, what a post nuclear exchange central europe would like, even in the most optimistic of studies...
Re Tekumel, it's a hodge-podge of middle east and central america. Because the guy is a linguist, the entire game is born out of a new language, a bit like Tolkein and Elvish, except he did not take it to the uttermost extreme like Barker did. It's one of those RPGs (IMO of course) that seems very intriguing when you read the blurb but in actual play is a bit 'meh'. Too much effort for what is just a post-apocalyptic fantasy game.
I just don't think realism makes for a very good game. Far too many strings. You need some element of 'magic' whatever you call it, either the technobabble of Star Trek, 'the force' in SW or plain old magic in fantasy games. having said that, Ars Magica is a good balance, of course the trope system is really a square peg on a round hole, a very forced way to bring what would be the irrelevant peasant character into the forefront.
"Be like Elminster," don't get me started. Ugh. I generally loathe the Forgotten Realms, but I'm finding that here, at least, you're not hitting me over the head with the annoying parts.
ANYWAY.
A game can never be truly realistic, but it can be believable, and ideally it
is. Realism helps with that because the real world is, well, real, and believable, so being more like the real world is inherently more believable. I think it's called verisimilitude.
For example, beautiful women are treated with deference and given presents just for existing. This happens in real life. Some people are also resentful and disrespectful. Adding these elements to a game where a PC is a beautiful woman can make the game world feel more real.
Economics can be another example, with different costs for different things in different places, if those things are available to buy at all, because of different conditions. A rich agricultural valley is going to have cheap food and lodging but expensive weapons and tools, a desolate war-torn province will have everything be cheap because everyone is poor, but most things simply won't be available for sale. It also pays (heh) to be mindful of the specific conditions of specific places and characters who are doing the buying and selling. NPCs are people too, after all.
Where they differ from reality, the rules of the game world should be the rules, they should operate as they do, and exceptions should be rare and notable. That makes a good game world. They don't have to be like the real world, just consistent and follow reasonable chains of cause and effect.
I agree about grogs in Ars Magica. It's my favorite RPG system, but grogs are just weird as a concept.
