It's funny, because we'll talk all day long about how (physical) play is so important to a child's cognitive development, never considering that maybe mentally-focused play is also beneficial. The very fact that video games are so compelling/addictive has given them the reputation of being nonproductive, so we tend to assume that they must give little or no benefit to the individual player.
Games are quite passive in the grand scheme of things and do little to actually challenge cognition. Compared to other basic toys / learning devices, video games don't have compelling research because I don't think it'll work out. There's no 3 dimensional space to work through (Legos), no emotional play (dolls, action figures), visual imagination time (crayons, Play Doh)...on and on and on with better examples that d…
They're insidious in the sense that there's not necessarily anything wrong with the themes on display or that they could not be considered complex, strategic, realistic, imaginative or _in the world they portray_.
It's more the superficial, that is audiovisual via unnatural interfaces, mode of interaction with them that slowly deprives you of the sense of what "the real world" feels like (smell/taste, heat/cold, tactile features, real three-dimensional sight/hearing) if there is or has been no strong counterbalance, i.e. "going outside/into nature", "real socialisation", that could (have) give(n) rise to the meaning or "flavor" of objects and interactions in virtual worlds in the first place. Smartphones are easily one of the worst offenders when it comes to the artificiality and shallowness of the interaction with them and - not owning one - I can only imagine what they do to the young generation...
Additionally they also diminish or at least they don't promote a certain kind of imaginativeness, which is more a flaw of any visual medium: Because everything is laid out for you, there's no need to exert yourself with trying to form mental images in your head or fill in the gaps, especially with modern audio-visuals. This'll become clear whenever you read a book. I'll admit that books are also passive in the sense that you never have to come up with original ideas pertaining to the flow or outcome of the story, but you get the point.
I know that not all games are created equal and several promote the idea of "being creative", "open world", etc, and they're probably less bad in this area, as is evidenced by huge modding communities although it remains unclear to me if those are lead by a tiny percentage of very productive members or if there's a widespread participation.
The epitome of all this are the hugely popular "Let's plays" where you now not even need to play games yourself, but are presented a "performance" by mostly uninteresting/unskilled individuals (my verdict), which seems like something that should never even exist outside maybe game reviews or other, more purposeful activity [1].
The above said, movies and videos are even worse offenders in essentially all of those areas, I suppose, but those were usually of short duration or limited availability, which is not so true anymore either, so a lot of what I wrote applies more strongly to them actually.
I'd even claim that with the non-ending, because largely archived, supply of virtual distractions and increasing consumption of those there's no wonder that, as is my impression (I don't want to go hunting for sources now, but I can speak from experience and refer to plausibility), attention spans are decreasing, as is the capability to for example write clearly and concisely, which would admittedly be a symptom of the former, nor that there's a growing NEET population without drive or goals: The machines and a highly productive creative industry think for you now in more and more areas of living.
[1] Interestingly the most widely watched and subscribed to (and insufferable) YouTuber in that area, PewDiePie, seems to be coming around to the ideas presented in this comment as well: https://youtu.be/osPKCm7jmeQ?t=6m14s
Edit: Reduced self-commenting/removed interjections