I think that by and large, cutscenes are an attempt to use film in an attempt to borrow the legitimacy afforded to film. And while there is a place for "movie games" -- I am replaying The Walking Dead currently, and it is very good -- it is not playing to the strengths of an interactive medium to place a literal movie in the middle of your videogame.
I think that developers should strive to preserve player control and player agency as much as they possibly can. Cutscenes are the literal opposite of player control. When it comes to real world examples, I think that Clint Hocking (Splinter Cell) was was right, and Hideo Kojima (Metal Gear Solid) was wrong. (Broadly speaking.) If you want to make a movie, go make a movie. As a genre, stealth games work best when the player is kept in control as much as possible. Things like forced failure in service of narrative are massive faux pas, and games like Hitman: Absolution discovered this the hard way.
This topic is especially interesting to me because of the cultural differences between N64 and PS1 developers. The N64's limited cart space pushed for conservative storytelling paired with a strong focus on gameplay. The N64 had a handful of exceptions, but overall the gravitation was towards telling the game's story organically you played the game. When you played GoldenEye (a major source of influence on Thief, which in turn was a major source of influence on Splinter Cell), you were in control of Bond at all times except at the start and end of each mission, bookended by a brief cinematic. The game didn't try to force feed you scenes from the movie the way Bond games designed for Playstation did.
When you played GoldenEye, you didn't sit there and watch things happen. You were an active participant in the events from the film. You didn't watch Bond escape from his cell. You escaped from his cell. You didn't watch Alec's faked execution. You were in the room, fully in control, as the Russians surrounded him. This is game design playing to the strength of the medium.
Metal Gear Solid 1-4 are like a car with an elephant strapped onto its roof. Incessant attempts to force feed a narrative through completely non-interactive movie sequences undermine the core game design. Which is a shame because the actual game design often has some clever ideas. Hideo Kojima is a very good game director. Metal Gear Solid is the go-to example over something like Wing Commander, which is the REAL source of "cinematic" games with celebrity actors and the like.
That isn't to say cutscenes can't be effective when using sparingly or creatively. I think that Max Payne 1/2 had a really good mixture of story delivered while the player was in control, story delivered through artful comic book cutscenes, and very rare ingame cutscenes introducing characters and such. But look at what happened with Max Payne 3. Suddenly the player was losing control of Max near-constantly so that the Dan Houser could force feed cutscenes to the player. The biggest improvement that could be made to Max Payne 3 would be the removal of the non-interactive cutscenes, replacing them with player-controlled storytelling. Don't take control away from the player unless you have a really good reason.
And "Oh, it's just like a movie. Games are art now," is not a good reason. The obsession with being viewed as real art by surgically grafting LITERAL MOVIES into your game is sad. If you can't tell your story without a MOVIE, there is something wrong with your ostensible "videogame story". You've robbed your story of the impact it could have had -- where the player personally experienced it -- and replaced it with them watching.
I often think about the differences in design priority between first and third person games. It's no accident that first person games have been shying away from taking control away from the player since... Doom, I guess? Doom was originally supposed to be filled with cutscenes. This didn't happen.
Imagine The Last of Us as a first person game. Think about how clunky and intrusive the never ending stream of pre-rendered cutscenes would be. I think there's a pretty strong overlap between third person games and cutscenes for this reason. It's the already existing overtones of "watching" things happen. But if The Last of Us were first person every single such scene would stick out like a sore thumb. Why are we watching Joel do things when we could be doing them overselves?
Far Cry 5 has some amazing cutscenes. Real "It really makes you think"-tier stuff. But you know what? Far Cry 5 would be a much better game if it stopped taking control away from the player. If it found ways to deliver its narrative without forcing the player to sit and watch.
This is a really good cutscene with some INCREDIBLE writing and acting. But imagine if you were in control. Imagine if you sat in that boat because you CHOSE to sit in that boat. Forcing the player to sit and watch stuff happen isn't really good game design. It can be hard to tell certain types of stories without removing player control, but every bit player control you take away weakens the overall structure. The story becomes a parasite, weakening the game to support a story that in many cases isn't actually that good. The best kind of games are a synergy of mechanics and story where the two work together instead of awkwardly flipping back and forth. I really like Conker's Bad Fur Day, but the actual synergy of game and movie is kinda shit. It's a series of minigames where you get rewarded with very well written and acted comedy bits. But imagine if the story was organic. Imagine if it unfolded in combination with truly sublime gameplay? It would be a better game overall.
There is no 100% correct answer, but a core principle is that videogames are an interactive medium. It's LITERALLY THE ONLY THING THEY HAVE GOING FOR THEM. So one would be very wise to lean upon this core design trait above all others.
edit: On the topic of Thief and games like Thief, I think that bookending cutscenes are a decent compromise. If you're gonna have cutscenes, place them at the start of a mission, or the end of a mission, and outside of that keep the player in control pretty much 100%.
The recently released Sniper: Ghost Warrior Contracts does the same thing as Thief, GoldenEye, Hitman, etc. Have your fancy cutscene at the start of the mission, but then keep the player in control. Don't interrupt them while they're playing to force feed them cutscenes. Bookend your narrative around maps or missions or whatever. It's a time-tested approach. Thief benefited from mission briefing cutscenes, but benefited far more from never interrupting the player mid-mission to force feed them cutscenes. All story during missions was conveyed through NPC dialogue the player could overhear and stuff like that.
