Computer graphics have come an incredible way since the days of the first video games. Games started as grids of white squares on a gray background, and have advanced through to 2-d scenes with 8 and 16 bit color, to polygons, complex textures, and full 3D. 

Today, games use tools like tesselation, shaders, occlusion, and mapping to achieve nearly photo-realistic results. And we may be getting closer to the holy grail of lifelike graphics, ray-tracing. 

Source:Youtube