It's all about the gap left for the imagination. FPP tries its hardest to put you in the actual physical place of the character, and to represent every object and location that would exist if the situation was real. Unfortunately it falls short of this lofty goal. FPP attempts to shrink the gap left for the player's imagination, but fails to adequately fill the territory it claims; it's more realistic but less convincing.
Even a modest human imagination is far more capable of creating "immersion" than the best movie or computer game graphics. ISO doesn't attempt (and fail) to simulate reality; it provides a vehicle for the imagination of the player. Fallout doesn't try (and fail) to trick me into believing I *am* the main character, it merely represents the experiences of the main character in a manner that fosters my imagining of those experiences. That's immersion.
But then, I grew up playing and loving INFOCOM text adventures; I understand clearly that a computer game (or a story) without any graphics is more immersive than a game with failed (as opposed to beautiful, or good) graphics.
I'm not stuck on ISO. I'm willing to look at any system that might be better, and judge it according to its merits. I have no doubt that better is possible. I simply haven't seen anything better yet, certainly not FPP. I agree especially with those who have problems with the fixed-neck-and-eyes issue, and I don't see how you could ever remedy that without a domed or spherical display like you find with military flight simulators. Maybe a helmet with an interior display, or a big pair of goggles would work, but do you want to wear VR goggles while playing games on your computer? Maybe you do.
There are things FPP does do well, and I appreciate it for those things, but I prefer ISO in most respects.
The one limitation I dislike the most about ISO is that you can never see the sky.