When making your game think of the scene as a movie and you are the producer. Imagine what the character/player will see (LOD). Alot of single player games are using high poly models but they are being used sparingly and in proper order. You cant just take a handful of 20,000 polygon models and put them directly into a game. Almost every model that I have in my collection which is a very large collection has 3 variations of detail.

For instance the first player screenshot of the arms and weapon. You can make that very high poly because the only thing that exists is the arms and the weapon and the weapon there does not even have to be that high. Just remember one thing though. The more poly's you put into a scene the higher the developers hardware configuration will have to be compared to the players.

There is no special trick for making a realistic model or any magical engine which can produce a higher quality scene. It is in fact just a factor of great artwork. You have to remember that some of these companies have employed some of the best artists in the industry. Great artwork, good shaders and proper lighting will make even a crappy looking scene look like a million bucks if done properly.

For instance I created a scene that I'm working on and its up there in poly's. Its a 1st/3rd person rpg. I have some areas in the map that did not come through the heightmap conversion very well. When I look at a hill and see a pointed 3 sided hill I dont see a hill, I see a nice rock and group of 2d bushes there to hide it from the players view. The art of illusion is nothing more then making players see what you want them to see just like a movie producer.