Gens 1 and 2
>Pokemon world is the real world, Pokémon have just recently been discovered and have been living with humans for a few decades at best. Origin of Pokémon is being researched and new species are being found constantly, that's why Johto mons are so hard to find
>regions are rural shitholes similar to any old village or town to appeal to anyone who grew up in a small town and wandered through the streets and woods looking for adventure
>minimal story for the player to self insert better and craft his own narrative
>less linear story progression to allow the player to choose where to go next
>legendary encounters are optional at the end of a complex dungeon to encourage exploration and make them special and YOU feel competent and skilled

Gens 3 onwards
>Pokémon has been sterilized and retconned to be a fantasy world completely separate from our own, they have lived with humans forever
>regions are now big fantastical theme parks based on exotic locations or recognizable countries rather than a conventional countryside that can fit anyone's imagination
>larger emphasis on story breaking the flow of the game
>more linear story progression
>legendary encounters are forced story based encounters (recently forced capture as well) which makes them feel soulless and not special. Chosen one narratives also strip any competence and skill away from the player who has everything given to him from birth

What went wrong? While Gen 3 onwards were massive improvements on the technical side of things, and I wouldn't argue in good faith that Gen 1 and 2 are better games technically than their remakes or Emerald/Platinum/BW2, I still feel like the earlier two gens had unironically more SOUL than the corporate sterile product Pokémon would become from Gen 3 onwards