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This is a great list of narratively strong games but I think this misses something unique in how video games deliver narrative. The interactive nature of video games means that the reader/player can experience narrative through gameplay itself. Video games are distinct in this player experiential means of narrative communication.
Sekiro: Shadows Die Twice for example has the player personally experiencing being beaten down by it's punishing combat system, then getting passingly good at that system, getting over their fears within that system, and then experiencing mastery over it. The endboss line "Hesitation is defeat" is not just a good character line, it is an expression of what is being experienced by both the in-game character and also the player. You the player have to get past your desire for safety and instead fight on the knifes edge, and overcome. Your experience mirrors the character's own experience of repeated trial, overcoming of the desire for safety, and success. But there is little dialogue, just experience.
Victoria 2 has no narrative at all. It's a grand strategy game full of mathematical expressions of interest groups, migrations, military power, & prestige. But through repeated games you the player experience the narrative of what it means to be a nation amidst Great Power politics. Of the iron faced incentives structures set by the world around you. Play as france and you may find yourself willing to go to war over this pointless piece of land in Africa no one had ever heard before called Fashoda just as an excuse to start a war to devastate a nation simply to avoid them overcoming you economically and subsequently militarily. So you have to go to war now, before it's too late. But there is little dialogue, just experience.
Frostpunk is a city builder that takes place in a steampunk Victorian Era cold driven apocalypse. There are a few dialogues to set the tone or inform you about what's causing the next crisis. But overwhelmingly the narrative is told through decision making. The first time you play (before repetition causes desensitization) you sit grim faced at each challenge. You may demand people work extreme hours with no rest. Children into coal mines. The butchery of innocent sick and wounded just to make room for the next batch and because it's not worth it to recover them when food is so low. The sincere temptation of dictatorship or religious fanaticism just to keep control of the populace long enough to make it to the next day. 'we can always loosen things up later' you tell yourself. Your jaw has been clenched for three hours without realizing it as you make Sophies Choice tradeoff decisions that you deem necessary because your people are all that's left and The City Must Survive. But there is little dialogue, just experience.
I think video games have a really powerful means of getting a person to emotionally understand a narrative or setting in a way that books and movies simply canot. It's different to read an idea or see it versus being personally constricted by a system and condemned to navigate a world within it's rules. So while I think your list is a fantastic set of games, a golden age even, I think your comment on decline since the ps4 overlooks how games more broadly can communicate narrative outside of the traditional considerations of dialogue or imagery.
I got to agree that the highest achievement for a game is to be able to carry its narrative in its gameplay. To do the opposite of the often mentionned ludo-narrative dissonance and achieve ludo-narrative convergence.
Another example that attempts to achieve both kinds of narrative crafting (both through writing and ludo-narrative convergence) I'd say is Death Stranding. It only achieves ones of them (ludo-narrative convergence), the writing being symptomatic of a man who has been told too much he is a genius and started believing it. But the way the gameplay is structured seems to be tailor made to reinforce the game's theme: cooperation is better than isolation. The game forces you to forge ahead in areas that are without any infrastructure, and that is where things are at their most risky. Once the region is connected, you can build infrastructure, but the costs are usually exorbitant, requiring unfun grinding to achieve. But the online system sometimes puts other people's constructions in your game, the more time you spend in a region helping the NPCs the more help you get from other players, and what was once difficult treks across inhospitable terrain becomes trivial milk runs due to all the roads and bridges you've made. And eventually you're spending hours building a zipline network in the most challenging region of the game not even for yourself since you don't have to stay there anymore, but for other players to enjoy. The game makes you altruistic. Not by forcing cooperation onto you or by heavily incentivising it, that would be meaningless, but by making you feel grateful for other people's help and by making you feel the gratitude of others (those almost meaningless likes you get when someone mashes a button on infrastructure you built).
I don't know if I can think of any game in older generations that have achieved such a tight integration of narrative in its gameplay. It's the exact opposite of Spec Ops: The Line.
In a rather similar vein, I really enjoyed the narrative and dialog in Firewatch (2016), even if, in some ways, it's more of an interactive novel. It's probably not for everyone, but the menu option to play with only a map and compass is an interesting vibe, too.
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I took the OP's question as one of asking "among the subset of games which tell linear narrative stories with plots, characters, dialogue etc., have these stories declined in quality over time?" I think that's a fundamentally different question to the question of whether games without such narratives have improved or declined in quality. In Frostpunk, there is no "narrative": the narrative is the player's experience in the game, enabled by the mechanics. It's the difference between a novel and a DnD campaign. Everyone intuitively understands that Frostpunk is trying to do something fundamentally different from what Call of Duty is trying to do, at a mechanical and experiential level - it's confusing that "success" in game design is invariably described in reference to how "fun" the game is, when this descriptor hides more than it illuminates.
And maybe this is part of the story: maybe at the start of the PS4 era, all the smart game designers in the indie space collectively realised that trying to use video games to tell stories the same way that books or films do was a lost cause, and focused instead on crafting organic, player-directed simulations with more intuitive interfaces and better production values compared to their 90s forebears. This would mean that the last ten years of AAA games still doing the lame "Hollywood action movie but you're the main character" thing isn't evidence that video games have lost their way or are on the verge of another crash: it just means that the lumbering AAA game studios haven't cottoned on to the new hot trend, which is intentionally narrative-light organic player-directed simulations. If this were the case, it would be a fascinating narrative to describe the last decade and a half.
There is also the issue of budgets. It costs more and more to make a video game. How big did a studio need to be to make a JRPG for the ps2 vs how big does it need to be for the ps4. As it gets more costly to make a console game the harder it is to justify taking a risk on an interesting narrative. I loved Specs Ops: The Line and I maintain that it's the best way to read Heart of Darkness. But I simply can't imagine it getting made in this environment.
PC gaming is getting better and better though, if only through accumulation over time. And if you consider visual novels like Utawarerumono to count as video games then things have never been better. More top 5% of visual novels are out then ever before. I remember when it was regarded as an unprecedented victory when we got VNDB's 3rd most highly rated VN (Muv Luv Alternative), let alone the more obscure stuff, or legendary H games like the Rance series, Evenicle, or Dohna Dohna.
On a more narrative stories with plots, etc point we did get Disco Elysium, which was pure lightening in a bottle never to be regained. If you have not played it before it simply must be experienced. Suzerain may count, although it's characters are more expressions of political factions that exist and the real character is the nature of Turkiye post WW-2. But books have used individuals to express such situations for a very long time now.
Overall I think both your initial argument and your critique of my own are strong.
Perhaps it's that when graphics were bad and gameplay restricted that one of the only options left was to rely on strong writing. But now that graphics are good pretty much everywhere and gameplay design is a fairly well mastered craft there is just not as much pressure to perform on narrative. But that's just an intuition.
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