The reason not to cheat is that visual artifacts and bugs can snap you out of immersion. Think of realizing that you don't appear in a mirror or that throwing a torch into a dark corner doesn't light it up. Even without "bugs" people tend to find more beautiful and accurate things more immersive. So if you want escapism, graphics that match the physics that you are used to day-to-day can help you forget that you are in a simulation.

The reason to cheat is that we currently don't have the hardware or software techniques to physically simulate a virtual world in real-time.