> These models will soon generate entire worlds.

They may. It's hard to expect this when we already see LLMs plateauing at their current abilities. Nothing you've said is certain.

I don't see them plateauing. I see that they are in their infancy. So far AI people were just persistently doing the dumbest possible thing that turned out to work, with very limited understanding, insight and innovation. At some point they will buy all the gpus and all the GWh they can and will be forced to actually figure out how to really improve what they are doing. Then the real breakthroughs will start showing up. There are probably improvements of 3-4 orders of magnitude right behind the finish line of the low hanging fruit picking contest.

AI will just be cheaper procedural environments