I never understood the “grain = realism” thing. my real eyes don’t have grain. I do appreciate the role of grain as an artistic tool though, so this is still cool tech
Look around you: nearly all surfaces have some kind of fine texture and are not visually uniform. When this is recorded as video, the fine texture is diminished due to things like camera optics, limited resolution, and compression smoothing. Film grain supplies some of the high frequency visual stimulus that was lost.
Our eyes and brains like that high frequency stimulation and aren't choosy about whether the exact noise pattern from the original scene is reproduced. That's why the x265 video encoder (which doesn't have grain synthesis since it produces H.265 video) has a psy-rd parameter that basically says, "try to keep the compressed video as 'energetic' as the original, even if the energy isn't in the exact same spot", and even a psy-rdoq parameter that says, "prefer higher 'energy' in general". These parameters can be adjusted to make a compressed video look better without needing to store more data.