In addition to graphics, HL2 was more or less the game that ushered in truly modern physics. Even today, some AAA games don't have physics systems as good. Likewise for facial animation.
There was also Doom 3 that year, though arguably it lacked the same level of fidelity. However, it was really ahead of its time in the years leading up to release.
https://www.youtube.com/watch?v=Qj3dPyk7hPI (Doom 3 at MacWorld 2001)