Realism is when a work of art (including fiction and traditional games) attempts to recreate reality with some degree of accuracy. It can be either a good thing or something to be avoided depending entirely on context.
Pros of realism
Realism makes the illusion that much more believable, which can make things more engaging. It also provides a handy frame work onto which things can be built. All but the most experimental and abstract things uses reality as a framework to at least some degree.
As it stands the world has a lot of great things that you can use, combine, tweak and master. If a creator is willing to do the research, they can created plenty of stuff that is wild and wonderful but realistic.
Cons of realism
Realism demands restrictions. It usually means throwing out the outlandish. You can't have Wizards riding armored dragons battling against a horde of exploding watermelon throwing golems piloted by sapient weasels and call it realistic.
A secondary con of realism is more meta: Some people all too often use “realism” as a way to justify pointless grimderp and to put down settings they don’t like by holding them to an inscrutable standard. These are the people who look at nu-Star Wars and, without bothering to actually voice their criticisms about its shitty writing, will insisted complain about the fact that the lasers arced like artillery shells in that one scene, or who will make their homebrew setting one where women are turned into breeding machines for no reason other than that it gives them tinglies in their dinglies, or who make every peasant literally live in shit and say that the grimdark makes it ”mature and realistic”. The root of this is a desire to seem intelligent without actually bothering to make intelligent decisions, and one way of doing that is to use a meager understanding of how the world works to criticize fictional works that are not held to the same standard, thus casting the actual grievances of people who are educated in their fields and know enough to be bothered by inaccuracies in a bad light.
More concretely, in traditional games realism all too often comes at the cost of heavy doses of crunch.