And who exactly sets this standard? Developers are free to make whatever the hell they want, if you don't like it don't buy it, it's pretty simple.
That standard is set by the consumer. You know, the person buying the game. That's why I said "I expect". If it meets your standard, that's fine. Also, if I had an Xbox One, I probably would buy it. GT7 isn't a tangible thing yet, so FM is usually my go to franchise after that. Even if I did buy it, doesn't mean I can't judge it, or not like certain things about it. I can make a list of things I hate in GT6, and I can do that for days.
SMS and T10 try to accomplish different goals first. T10 is about the 1080p and 60FPS and SMS cares about dynamic stuff going on in their games. I don't have a problem with either aproach to game development and think neither are in a comfort zone or are searching for an lazy and easy way to do their work.
I know their goals are different. PC has 70+ cars, FM6 has 450+. PC has 30 tracks with 110+ locations. FM6 has 100+ locations. You're right though, SMS want's everything dynamic and Turn 10 want polish. Their polish comes at a cost. A lack of variables.
Bear with my tangent for a second:
Driveclub launched as a very polished racing game. Day/night dynamic TOD with 50+ cars. The game played amazingly well, but I put that game down after a couple of weeks. When the weather patch came out, I played the game again, and it easily became my favorite car based arcade racer (lol adjectives everywhere) of all time. You can play the same track 50 times over but have a very different racing experience every single time. It blows my mind how captivated I was by a FREAKING WEATHER UPDATE.
I've put hundreds of hours on FM3 and 4, but it's always about perfecting the same track every time, in the same condition. Sure, you can choose "late afternoon" or something like that, but it was still daylight out. It was still dry out. Having static TOD and rain is doing this exact same thing. You have a big puddle that's the exact same depth every single time you go around that part of the track. It's not like it progressively gets larger, where you can still have a few chances to squeeze on the outside or inside of a turn. No, it's the same EVERY time.
PD still hasnt got the AI right. Whats more important weather change or AI? Give T10 some credit.
Why not both? It's not like the AI team is going to be doing the physics, and vice versa. You have staff dedicated to all parts of development.
It must be a technical limitation, if not one game has been able to achieve it and get it running and optimized, at a technical level.
That's a false equivalence. Other than Project Cars, a multiplatform game made with a 3 million dollar budget, the only other racing sim on Xbox One is Forza Motorsport. You can't compare the two, but you can extrapolate what is possible.