This to me is more realistic than fake CGI.
Wholeheartedly agree. That looks more real because it
is real. There's something tangible right there in front of you that you react and respond to and that moves around in ways that a computer could never fully replicate. Emulate maybe, simulate perhaps, but replicate? Replicate the random movements of individual strands of hair? Replicate the way skin deforms in mathematically confusing ways when it wrinkles up or presses against itself? I do not think I will see that in my lifetime.
Plus there is a kind of magic in puppeteering that making something with CG can't touch. You look at kids seeing muppets from TV or look at the way some people respond to very realistic fursuits. There's a kind of awe in their eyes and I think that moment, that split second moment you can sometimes see in the eyes of adults where their inner kid jumps out, their suspension of disbelief takes them and for just that one instant you can see in their eyes that they fully believe the illusion.
An actor in a full body puppet suit can get that feeling from the actors, the crew, the director, everyone there as they work the puppet. Meanwhile CG stuff has actors standing in place talking at nothing and having to be described to what the creature is doing and trying to act appropriately.
I'm not saying CG has no place in film and tv, it's a tool in the toolbox and it should be used. The harm comes in trying to use it as a multitool, or as spackle to cover your plot holes.