I guess I quite agree with your statement about the scope of a simulation (which kind of also distinguishes a simulation from a game where the scope is less clear).
Edit: Since immersion and realism is something I'm rather interested in, perhaps yet a few remarks.
First, let me clarify that while I think that the degree of realism of any simulator can be objectively determined by comparison with reality, the degree of realism people enjoy or find useful is a matter of taste and practice.
A simplified simulation of some aspects gives one time to focus on the essentials and avoid getting lost in details. The Orbiter stock Atlantis is not a particularly realistic spacecraft by any measure, but it gives a hands-on picture of how orbital mechanics with something with the gross capabilities of the Shuttle works out. And you do not need to work through 2500 pages to fly her. It's why people training to be airliner pilots learn flying on a single-prop GA craft - to avoid information overload trying to understand MFDs and the autopilot and just focus on how a plane flies.
Also, just having fun and goofing around with a simulation is as legitimate as use case as professional-grade training. I really don't want to take a stand either way - I have my preference, others have theirs. None is better than the other.
Second, from many conversations, what leads to good immersion is also very different for different people. For many it's graphics and eye-candy. Others tell me it's 60 fps steady, no lags, delayed frames or anything, it's all in the smoothness, visual quality is otherwise irrelevant. Yet others need their home-build cockpit with yoke, pedals and four monitors. Yet others swear on view shaking effects by minute g-forces and such like. On FSWeekend, I talked to a guy who told me it's sounds - he can't stand generic engine sounds, it has to be a high-fidelity recording of a real engine sound and real ATC procedures.
What works for me personally is usually faithfulness to physics (I know way too much of how things ought to be, I expect certain behavior and if the sim doesn't react as I expect, I get disappointed), good graphics and (perhaps most importantly) a sense of depth. I enjoy feeling that when using the sim, I am just scratching the tip of the iceberg, that if push comes to shove, I can really go through the procedure in the pilot manual and re-start that engine in mid-air, that me flicking fuel valve switches really does something meaningful. Depth, as in there's much more to the simulation than I'm currently seeing.
Third, personally I see Orbiter as a platform and as such not to be judged for realism. Given the multitude of addons, anything else makes no sense. I can judge realism of SSU vs. Shuttle Fleet and they're different, but they both run with Orbiter.
It may be that the platform imposes certain limits on what is possible (for instance, I have the suspicion X-Plane's way of deriving flight dynamics from the 3d shape in real time can't be good beyond a point, otherwise there'd be no computational fluid dynamics or wind tunnel testing) - some platforms are very flexible and extensible, others are fairly rigid. So it's not like the question is completely separate from the platform, but fairly. Even if you have the most sophisticated simulation platform imaginable, 'garbage in, garbage out' is still valid - if you feed bad input data, you'll get bad results. More often than not, it's lack of input data that limits realism, not lack of computing power.
And last but not least, having said all that, I prefer to learn what I really get with a piece of software from descriptions. If I'm looking for a highly realistic simulation and download (or - gasp - buy) something advertized as such and it turns out to be a game with cool graphics, then I feel cheated. A realistic simulation is something you can do science with, something which prepares you for the real thing. I've once made the experience to get a ride in an airplane I knew from the simulation, and when being offered the controls, I felt immediately at ease taking over and flying it into the approach ATC vectored us into. And that's what distinguishes a simulation from a game in my book.