It was decidedly not nearly-optimal a few years later on microprocessors like 8080, z80, 6502, etc., which were highly register starved, 8-bit rather than 16-bit, non-orthogonal instructions and registers, etc.
As for "not to use C for time-critical applications", both then and now people sometimes write critical inner loops in assembly, it's just less common now because compilers are much more sophisticated.
But C was indeed used on "time-critical applications", aside perhaps from inner loops, back in the 70s, certainly on PDP 11s, and sometimes on less ideal microprocessors.
> why would, say, all those NES programmers write all that assembly?
Several reasons. First and foremost, things like that were highly RAM starved by the standards of the day. The PDP-11/70 had 64k of instructions and a separate 64k of data per process, with a total amount of RAM of up to something like a megabyte.
The NES had 2k RAM onboard -- although cartridges could extend that -- and the register starved 6502.
Another big reason is that, in every era, games are always pushing the limits of the hardware, and developers were typically quite willing to code in assembly if they believed it would give them a 20% edge in speed or decrease in space.
But also there was a mythos (that hasn't completely disappeared) that assembly would yield vastly more than 10%-20% speed increase over high level languages of the day, including C, so for most developers, they never even considered anything but assembler.
It also was not uncommon at the time for many of those game programmers to only know assembler, and not any other language except perhaps Basic.
The availability of C compilers for various platforms was not so universal then as it is now, especially on non-Unix systems, and the non-Unix C compilers, when available, were not necessarily at the same level of quality as the Unix C compilers.
Last but not least, C had not yet taken the world by storm, and a lot of those developers and companies had never even heard of C, and the ones that had heard of it were pretty dubious, more often than not.