As real as it gets...
Simulation Games are games that combine skill, strategy and chance to simulate a complex system, or try to imitate reality, for example a stock exchange, a civilisation, nature, or some machinery, like a racing, or a flight simulation game. Simulation games are often abbreviated to 'sims' of some kind.
Which simulation game was the first one is hard to determine, but Gran Track 10 was the first video driving game1, released in 1974. It used an overhead perspective, was monochrome and used dots to represent the players, so it lacked some reality. In 1976, Midway released Midnight Racer which was a 3D driving game and a Hi/Low shifter. Atari released another driving game in October 1976, very much alike Midway's, named Night Driver, which had a 3D perspective like Pole Position, but was in black and white, and only displayed the side markings of the road to get high framerates, as in 1976 the hardware was not capable enough yet.
Another interesting driving game is Rally-X, released in 1980, it was saturated in color, "cartoon-style", instead of lines on a black background. "Its main claim to fame in the history of games was the introduction of the first bonus round."2
Pole Position, released in 1982, which was a "big moneymaker", and its innovations3 are:
...Pole Position defined the genre. It was the first driving game to capture the feeling of the track, and the skill involved required all your attention. Shifting gears, anticipating the next turn, dodging aggressive drivers, and making the qualifying lap were all part of the experience. Pole Position was the first great driving game, and the first that truly satisfied our need for speed at the arcades.
As early as 1976, controversy started in video games, initially with a game called `Death Race', where players had to run over fleeing gremlins with their cars, which then turned into tomb stones screaming if run down. The challenge for the player was to avoid the buildup tomb stones on the screen. This game was inspiration for many other games where players had to run down living beings in cars.
Another class of simulation games are the flight sims, of which FS1 was one of the first, released in Jan 1980 and written by Bruce Artwick4. He may have been inspired by Airflight, a game for "PLATO" (a networked computer system focused towards education), the game apparantly released somewhere between 1970 and 1977. FS1 features an aerial battle, in which bombs can be dropped on an enemy base. All kinds of parameters of the plane were simulated, but on the other hand the scenery was very simple:
All essential controls and instrument are present, including gauges for airspeed, altitude, vertical velocity, heading, turn rate etc. All functions and other input are controlled from the keyboard. The primary controls for rudder/ailerons and elevators are conveniently positioned in a diamond-shaped configuration: T - FGH - V. The rudders and ailerons are auto-coordinated. The movement of the airplane is conform normal aerodynamic rules. Even stalling is simulated.
However, there was still no plane in sight, no spot plane view, but also no side or rear view, no time- or season-effects, no winds or clouds, no radio communication or radio-beacons and no scenery that looked anything like the real world. Just a fixed scenery with a few unrecognizable objects.
Microsoft became interested in this flight simulator, and Bruce Artwick stated: "I decided to go with Microsoft because of its nice small-company atmosphere (sic!)."5,6. Microsoft released its Flight Simulator in 1982, in which it added more scenery and more realism. The shortcoming in realism of the environmental in FS1 was solved:
The scenery, although limited to 4 areas (Chicago, Seattle, Los Angeles and New York/Boston) depicts a (simple) presentation of the real world, based on an ingenious coordinate system, developed by Bruce Artwick. The scenery contains some simple buildings, bridges and other objects like the Statue of Liberty and the Space Needle. Some 20 airports are included with correct navigation aids (VOR, OMI) and ATIS and some runways are equipped with an Instrument Landing System (ILS).
The simulation can be made even more realistic by setting environment factors as time of day, season, clouds, wind and turbulence. The number of aircraft characteristics considered in the calculations has been increased to 35.
Flight simulation games advanced more and more in graphics, and were also combined with guns, bombs, missiles, missions, and war simulations to get more action into it. But flight sims remain characteristic in that players usually need to learn quite some keyboard commands to be able to successfully take off, fly, control, and land the plane.
The stock market is also a complex system, so potentially a nice environment for a simulation game. Blue Chip Software, founded by Jim Zuber, published Millionaire in 1982, with which you can "track earnings, volume, general trends, and specific industry trends"7. The value of stock was influenced by several factors, just like in real life, news, analyst opinions, "mood", etc. According to one reviewer: "My wife said she learned more about how I invest money from playing one whole session of Millionaire than from reading the Wall Street Journal on and off for 15 years." So the game served an educational purpose as well.
Later business sims include SimFarm, which was released in 1993 by Maxis. One had to run a farm, and here the trade market was simulated with rising and falling prices of various products; selling a lot of the valuable crops at high quality was the objective, but crops could also get infected with insects or other bugs, lowering their quality.
There were more sims having a trade aspect, but most of them were more oriented towards construction, for example Transport Tycoon, in which forests, farms, oil rigs and various other industries' production varied along with time, but the player's focus was much more on building rails, roads, and waterways, and planning traffic routes for them.
In these kind of games, the player builds a system, sees how "well" it does according to some scoring function, and adds, modifies and removes features to increase its score. One of the earliest examples is Rocky's Boots, written by Warren Robinet, published by The Learning Company in 1982. The author has his online place on the web, where he describes the game play:
Rocky's Boots was a visual simulation that made it possible for upper-grade-school students to design simple digital logic circuits, using a joystick to move around circuit symbols on the screen and plug them together. The circuit components were AND gates, OR gates, NOT gates, and flip-flops. The colors orange and white were used to show the logic states '1' and '0' of the components, so that as the circuit operated, the signals could be seen propagating through the circuits, as if the electricity was liquid orange fire flowing through transparent pipes.
Another popular game in this genre was SimCity by Maxis, released in February 19898, where the player has to build and plan a city with residences, industry, and commercial property, build roads, solve traffic jams, and has to deal with occasional hazards like earthquake or a melt down of a nuclear power plant.
Later again, in 1994, BullFrog releases Theme Park9, and brought "thought bubbles" into games. The player has to build theme parks, and visitors wander around, go onto attractions, buy some food and drink; and now the player can see what the visitors are "thinking", whether they need to go to the toilet, are hungry, are bored, "much like The Sims later".
Another interesting game in this genre was Transport Tycoon, also released in 1994 by Maxis, where the player builds a transportation system for the country. Possible options are trains, busses, ships and airplanes, and the player has to carefully plan railroad tracks, as trains tend to get "lost" on complex tracks. All the equipment has a maintainance cost associated, and industry production varies, so number of vehicles or train wagons has to be updated sometimes. Innovative elementsA in this game, are that the cities grow when more and more goods and people are transported in and out of the city, and that the terrain can be modified: height increased or decreased, plant and remove trees, and more.