A couple of episodes later they show Picard falling in love with the holodeck, being all fascinated about how realistic everything is. The holodeck in TNG was something absolutely new for the characters.
I'd rather argue that from Picard's reaction it directly follows that he was familiar with holodecks already.
The heroes are always impressed by the quality of the simulation, over and over again. Not the concept, but the quality. They even enumerate the details that impress them each time. Whenever they say "this feels so real" they are establishing that they have already experienced less real-feeling versions of the same.
And they are always left wanting - there's always room for improvement in the realism, always new tricks to impress them. The TV audiences cannot fathom this, because from their point of view, a holodeck scene is no different from a conference lounge scene. It's equally fake, as it's created by the very same methods of fakery: actors, sets, costumes, lights, the occasional but expensive visual effect. For the users, there apparently is a world of difference between a pre-TNG holosimulation and their real working environment, and also between an early TNG holosimulation and reality. Only in the late seasons can characters get fooled by Federation holodecks for any length of time.
Timo Saloniemi