The best analogy I can offer for controlling a virtual avatar is driving a car. You are not the car; you are only driving it. The elements of the HUD in this instance are the speedometer, fuel gauge, etc. What game designers are doing is the equivalent of replacing the speedometer and fuel gauges with transitioning colour lights so that you can get the "feel" of the car. It sounds nice until you find yourself getting pulled over for going 98 in an 80 km/h zone even though the light never looked different all the other times you were going 80. Or were you really going 80 in the first place? No one knows! Even so, developers are still using every trick they can think of to make their games more "realistic" and "immersive" to make the players actually be in the game. There is a problem here that it seemingly falls to me to explain to everyone: it's impossible. You can't do it.
Here's another example: let's say you're in the middle of the fight and you want to assess how well your opponent's doing. Typically, you look at how they're standing, any injuries they have, the rate of their breathing and so on and so forth. As you might have figured out, you can't do this in a video game (well, in most cases) where all enemies have the same sprite regardless of whether their health is at 100% or 0.000000001%. One thing that never fails to annoy me is when a game's enemies primarily take more than a few hits to take down and I'm never given a health bar for them. In shooters, where enemies realistically die in one shot, it's okay but JRPGs do not have this excuse. In most Final Fantasy games, the only way I can tell how close my enemy is to death is to use the Scan spell on it, which is extremely weird as I am literally conjuring and manipulating the fundamental forces of the universe just to figure out something that my PCs could probably guess just by looking at the number of scars that the enemy is now sporting thanks to their ridiculously huge swords.
I have praised games in the past for making me feel like a part of them, they did this through good writing and competent game design, not through game mechanics. In fact, when game designers try to use game mechanics to bring about realism, it only makes the seams more apparent. Has anyone made jokes about health bars? Has anyone ever looked at Iji and gone "LOL, hr helth sa lin of red sqares!" I don't remember any but I do remember one or two of undoubtedly many eye bleeding jokes for the more "realistic" health system. Joking about health bars is like joking about speedometers; it's all fun and games until you find yourself getting overtaken by two cars in one second.
Don't get me started on when games try to justify the HUD. There's one segment in Assassin's Creed III where you are supposed to infiltrate a place as Desmond and your tech-savvy friend gives you a flying robot camera. When activated, the camera then flies behind Desmond and pretty much stays there. It does absolutely nothing and is never brought up again. Its only purpose is to justify the third-person gameplay and to glitch out when he "dies" so he can "respawn". News flash, Ubisoft: we don't care. Not to mention we've played as Desmond in third person countless times before and this is hardly new and we've been completely accepting of characters coming back to life in Call of Duty and everything else. Why did you think this was necessary?
Now, I'm not against the simplification of HUD elements. God forbid we go back to the days of having one quarter of the screen being occupied by the HUD. However, there is a right way to handle the HUD and a wrong way to handle it. Like it or not, the HUD is vital to playing a video game (that is, provided it's more complicated than Slender) and the way people keep trying to shove it out of existence just doesn't sit right with me. And what is the purpose, really? Immersion? You mean the thing I get when I'm playing Pandora's Tower where I'm greeted by Elena upon returning from the towers and I enthusiastically say "Hi!" back and I have to restrain myself from tackle-hugging my TV? Or do you mean the thing I get when I'm playing Deus Ex and I've just attracted an enemy's attention and I'm hiding away in a corner holding my breath, praying he goes away? If so, there's something horribly wrong with you if the player is more easily immersed in a cyberpunk or steampunk fantasy than your modern day war game.