I would add that, even back in the day, the use of a variety of high-end tools well beyond the platforms they ran on were often used to make our little vidya games. I was surprised to eventually learn that it was not uncommon for Amiga games to be developed on 386 computers and the like, which were bleeding edge at the time, even for smaller games that only had one lead programmer and somebody else doing the music or whatever.
I agree with those here saying that the artistic aspects of the late games were as important as any technical proficiencies for how they looked though. Another thing to keep in mind is that the art was itself evolving the whole time, which is only natural. Regardless of hardware, the art just looks better in later arcade games in general.
It's anecdotal, but I recall being a small part of a cartooning digital art community as a kid on the Internet around the time some of the earlier SNK games were being developed, and one day there was a poll on Usenet or something about the favorite artists from the community at the time. A top ten was developed and...it was made up of various promising, but actually pretty limited amateurs.
I mention this cause, not so many years later that same list looked very different in terms of the art quality it referenced. Some of the OG people improved, sure, but also, the newer folks just had it going on and had much more advanced ways as well, building on what had come before. The shift in art quality in well less than ten years was dramatic, even though the tech tools hadn't really changed that much.
I can still recall marveling at graphical tricks I hadn't seen pulled off before, and yet only a year later accepting them as just normal touches that everyone knew about. I'm sure a similar evolution occurred in pixel art for games around the same time, it's just what happens.