A term used that is usually used in the context of entertainment, which can include reading, video games, television, and films. It refers to the reader/watcher's ability or desire (or both) to ignore, distort or underplay realism in order to feel more involved with the game, film, or book. This is a very common practice in many action movies, some books, but probably the most in video games. It is usually permitted and ignored because most people don't care about realism in their entertainment. It's also much more difficult to program a realistic game with highly realistic damage scales, movement, targeting, and more. Some games which are meant to be silly (grand theft auto) don't require much of this, because the entire atmosphere revolves around the less-than-serious style. However, some others attempt to be serious but fail to relay such. This still does not ruin the feel for most, though.
Some people have poor suspension of disbelief, or just don't prefer to use it. These people usually don't care for casual 'shoot em up' games unless there is a huge element of humor and stupidity that is integral to the game itself. They are sometimes perceived as tight asses, but in reality, they just prefer to keep their unrealistic games silly and stupid.
Sometimes, fan boys will take their suspension of disbelief too far and proclaim blatantly unrealistic things to be realistic in an effort to validate the game against 'invaders' who simply assert the truth.
Live Free Die Hard - Stunts are too extreme for average cop, certainly a good movie, but the theme could have been portrayed in a much better way if done more realistically.
Resident Evil 4: Ability to dodge lasers, but not clumsy villagers. Headshots do not decapitate or kill, but neck breaks kill. Metal masks deflect bullets. Story of 'alien virus' does not nearly reconcile with these shortfalls and main character is unable to walk and shoot at the same time despite having supposed secret agent type reflexes.
Halo: Using assault rifles, pistols, and Jeeps in ad 2550 despite extreme advances in space travel. Highways, buildings, and tech that look identical to C. 2025
Starcraft: Organic creatures that can somehow tear through inches of armor and resist hypervelocity bullets and bombs. Missiles that can tear apart advanced alien buildings.
Starcraft is fun as an RTS, but it is simply difficult for some to get involved in the story because of these shortfalls in realism.
Halo and Resident Evil 4 are fun shoot em up games with the former having a more realistic damage scale, but both try to be too serious for the lack of realism. However, with suspension of disbelief, most people are okay with all of this.
In the last season of Game of Thrones, the creators demanded the audience to put their brain aside, and just accept what is presented to them. What happened set an example that will forever be remembered as a failure of "suspension of disbelief".
when odd job, in GOLDFINGER sends a lincoln Continental into the compacter, then places the 5000 or so pound block into the back of a 1964 ranchero, and drives off...well it must had a suspension of disbelief!