2D peaked during the 16-bit. Sure, you can get new games that look amazing like >>3594820, but in the end I think nothing really topped some of the best games during 16-bit.
Also >>3594824 is right, 2D continued on handhelds during non-/vr/ times.
3D and polygons was the reasonable next step. They were already experimenting with 3D gameplay ever since before the 3rd gen came around. It was only thanks to 90s technology that 3D games could actually become more affordable to make, with more resources, etc. But the idea was always there.