The thing is, computing has been getting steadily faster, just not at quite the pace it was before and in a different way. With GPUs we have proven that parallelism can be just as good or even better than speed increases in enhancing computation. And there again have been speed increases trickling in. I don't think it's realistic to say that more speed advances are unlikely. We have already been through many differen…
However, 1000x is really not very much. With a 1000x uplift, we could certainly get better weather predictions, but not necessarily paradigm-altering improvement. In a real sense, we already have 1000x speedup and its what you get in a contemporary "supercomputer", whatever that is in a given market at a given point in history. Let's say we had perfect 1000x improvement in compute, storage, and IO such that everythin…
The fastest thing to change is we'd increase player limits per server, per player CPU costs are significant and we could bring the player limits to maybe 500 before network speeds start being a consideration. Certain ai improvements that are currently not viable like goal oriented ai design and pathfinding improvements could be added that would make new kinds of gameplay possible. Hell with even just 10x I would be very tempted to try unifying our atmospheric and chemistry simulations so they use the same data structures, thus allowing chemical reactions between gases that aren't basically masses of nonstandard performance hacks on the back end.
In short though, even minor performance improvements would vastly change what we could accomplish. 1000x is extreme and you would see very different games that could make use of techniques that today are mostly relegated to games built around them as a gimmick that they make sacrifices for.