It might be because the creator (Eric Lengyel) concentrates on tech rather than art. It probably has all the tricks of other modern engines (e.g. displacement mapping, post-processing, fancy AA, etc), but it doesn't look like he has created or acquired the art to show it off.
Also, all of the demos show a FPS. It would probably be worth his while showing other game types, to appeal more broadly.
There is a big quality difference between Unity Free and Pro. You don't have access to a post-processing framework in the free version, so the quality is going to be limited - i.e. I think most Unity Free demos and games coming out at the moment look like 8-10yo tech. With the Pro version, you can get your game looking as good as most current titles, as long as you have the art and shader development skills...
That FPS you see, is stripped out of Eric's indie game. He works on it when he's not working on his engine and that time is very limited I imagine. He only has one artist doing the art and I think the artist is part time.
An experienced programmer will be able to look at the demos and API and know what can be done with it. I'm not much interested in graphics myself, I'm only interested in how RPGs are put together, but the experienced graphics programmers at the forums say, they like C4 because of its "clean renderer", whatever that means.
as long as you have the art and shader development skills
It always comes down to skill. Saw a great looking RPG here a few months back being Kickstarted by Russians. They used Ogre, because they said they can't afford Unity and everything about the look of the game, came down to the skill of their artists. It had nothing to do with the engine.
Now if they had made that game on C4, everyone would be saying how awesome C4 is, because thats how people are. Thats why big game engine makers spend a fortune on their demos, because they know flashy demos are what sells game engines.
Having said that about fancy demos, here's a video from a talented kid that uses C4. He does crazy things with it, I wouldn't have a clue how to do. Have a look around his channel, if you want.
Edit:
He got the lighting to work with the girl using an environment light, with small values for shadow casting. He said the impact on performance was small. He was still trying to figure out how to make her cast a shadow.
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