Modern computer games are a very impressive set of things. A lot of them have deliberately overcomplicated character designs, just so that they can show off that they've managed to make clothing that acts like textile, hair that looks at least believable, and so on. That's on the physics simulation side of things, but it wouldn't mean much without improvements on the graphics side of things - and while a lot of that is done right, some of it is done very badly.
The trouble is, computer games don't ever really get close up with cloth. The closest you'll get the camera is about three feet away, and from there only the most pronounced surface details will be necessary to render. A chunkily cabled sweater, for example, would benefit from the trick of bump mapping. Bump mapping is a clever means of faking extra detail; it involves making two versions of the 3-d model. One version is in stupendously high detail, and you spend hours calculating just how the light will reflect off it so you know what the surface detail does to the shadows on it. The other version is the low-detail version you'll use in the game; that, you colour in, and then you overlay the shadows you pre-calculated with the detailed model. The result is a model that's computationally cheap to render, but looks incredibly detailed; and that's what you want to keep gamers happy. Gamers demand pretty worlds, and they demand no problems with frame rate; these two demands are in opposition, since the prettier a world or an object is, the more oomph it takes to render it.
The trouble is, art sensibilities haven't yet caught up to the fact that you don't always need to use this trick. In some situations, a bump map can make things look worse. Two games that run into this are Just Cause 2 and XCOM: Enemy Unknown. In Just Cause 2, one of the notable NPCs is always shown in a suit, with a ridiculous bump map. It looks as though the suit was woven from garden twine. While tropical suiting is not generally as smooth as temperate suiting, it's by no means that rough! In XCOM, the problem is worse; one NPC in a labcoat has similarly overdone bump-mapping, while the NPC in a ribbed military sweater (the proper green wooly pully that so many British country people love for its durability and insulation) appears to have no bump mapping, even though it would be appropriate.
It's a shame we're in this hole at the moment. Most modern games are either close enough to allow suspension of disbelief, or stylised enough to not demand it; but we seem to be in the uncanny valley of clothes right now.