They can animate faces realistically enough that the characters' expressions are capable of evoking emotional reaction as well as any live-action actor![]()
I like animated Anakin much much MUCH better than live-action (maybe I should put that in quotes) Anakin. There have been several moments when I found myself happy, worried, fearful or touched by something that happened in TCW, which just reminded me of the total emotional void I felt during all of the PT (unless annoyance counts as an emotion). Or it could the that my standards have taken a hit because of the PT.

And I know why Lucas is intentionally making the animation stylized and not attempting photorealism: it's because animation hasn't yet achieved the ability to create absolutely convincing human faces, and to approach realistic human faces gets you into the "uncanny valley" that causes intense negative emotional reactions from people - it's freaky to see faces like that because our brains are evolved to be very picky about faces (a quality that helped our ancestors survive in tribes).
But the uncanny valley problem applies only to faces, not to bodies or how they move. There were no oddly-lurching people around 10,000 years ago for our ancestors to worry about, so our brains aren't sensitive to that. So why animate the bodies in a lurching way? They could move elegantly and fluidly, and also with more of a feeling of weight and force behind them (they often seem too weightless in fights - I'd like more of a sense of visceral force). Give them stylized clothing and it'll match the faces and the rest of the animation style.