The whole idea that "most games don't use all of a console's full potential" is largely a myth; there's some improvement after the first wave of games, but that's because the first games began development before the console was finalized, and hence had to be open to the console being tuned down a bit.
With older consoles, (3rd/4th-gen stuff like the NES, Super NES, and Genesis) pretty much all the power was used from the start; there's not much available with the CPU, graphics or audio. Most limitations often seen, especially for the SNES, were in terms of add-on stuff and accessories, which were limited primarily by cost/practicality. I mean, sure, an 8-player game sounds cool today, but back then, even getting 4 people crowded around a TV was a stretch... And that'd assume the player owned two splitters. (and remember, early 90s TVs were NOT the huge ones that are standard today)
Similarly, there was also cost concerns; making a copy of a game wasn't a matter of just paying 5 cents to stamp another DVD; they had to be burned onto ROM cartridges, built on assembled PCBs. If you wanted a large game, that meant paying for more ROM chips. Sure,
Star Ocean or
Tales of Phantasia where a then-mind-blowing 6MB... But they also cost three times as much as a more standard 2MB game to make; I'm talking $50-60US in costs per cartridges, vs $15-20US. And if you wanted to add in a snazzy SuperFX or SA-1 chip to get the improved visuals seen in
Yoshi's Island or
Super Mario RPG, (respectively) that's another $10-20US.
For the original NES, the console was even more limited; you had a whopping 2 KILOBYTES of program RAM for the CPU. Special things were limited to screen effects pulled off by altering registers on a per-scanline basis (
Kirby's Adventure does this a lot) and also using bank-switching to make the cartridge as large as you wanted to spend money on. (similarly, KA packed a whole 0.75 MB)
You might be talking about some tech demos done, such as a
raycaster on the NES, but they don't represent actual GAMES... Adding in the ability to do something other than walk around would've likely been too much to handle. Similarly, one must remember that back in the 1980s, the FPS genre
outright didn't exist. It didn't start becoming POPULAR until
Wolfenstein 3D hit shelves in 1992. and by then the NES was old hat. So it's not because any maker held back their console's capabilities; it's because it was either impractical, or simply
no one had thought of it at the time. The same goes for all consoles, regardless of who made 'em, be it Sega, Sony, Microsoft, Nintendo, or whatever.
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