Has a realistic looking film ever been produced entirely virtually?
Well if you take a look at the mandalorian, almost every background is computer-generated. Sure, the actors are real, but almost nothing else. If you're looking for entire cgi-sequences, you can take a look at the marvel movies. Many of the fight-scenes are completely CG.
Asking what's important for photorealism is a hefty question. There's a bunch like:

Accurately ray-traced shadows
Accurate reflections
Accurate roughness on reflective surfaces
Sub-surface scattering (like light shining through a hand)
Accurate motion-blur, focus rack and rolling or global shutter, depending on which camera you're imitating.
Accurate physic simulations
Accurate fluid simulations
Accurate wrinkles and stress-maps for skin, cloth and other flexible solids
Proper animation of people and animals, preferrably motion-tracked
etc. etc.

I could go on for pages, but the point is that simulating all the jazz of the real world is very expensive and hard labor. That's why most films rely on CGI only when filming it for real would either be too expensive or too dangerous. No person in their right mind would try to make a whole film CGI with the goal of the viewers not noticing, when they could save around 75% of the budget by just filming it in real-life and getting a similar (often better) result.