That's not what "world-model" means: see https://en.wiktionary.org/wiki/world_model. Your [2] is equivocating in an attempt to misrepresent the state-of-the-art. Genie 3 is technically impressive, don't get me wrong, but it's strictly inferior to procedural generation techniques from the 20th century, physics simulation techniques from the 20th century, and PlayStation 2-era graphics engines. (Have you seen the character models in the 2001 PS2 port of Half-Life? That's good enough.)
Inferior in what sense? Genie 3 is addressing a fundamentally different problem to a physics sim or procgen: building a good-enough (and broad-enough) model of the real world to train agents that act in the real world. Sims are insufficient for that purpose, hence the "sim2real" gap that has stymied robotics development for years.
Genie 3 is inferior in the sense you just described: the sim2real gap would be greater, because it's a less accurate model of the aspects of the world that are relevant to robotics.
