Wired magazine takes a look at the science of magic. (thanks to Eric Alba http://twitter.com/alba for mentioning it)
Click the title or use the link below:
Magic and Illusion
Many people think realistic vfx are much more difficult to pull off but in fact they can be easier because as pointed out, people don't tend to focus on anything except what's in the spotlight. The audience will easily accept something as being real if it's not fixated on and if it's a common thing. You can do a matte painting of a house along a street and you can do the same thing of a very abstract haunted house centered in frame. The quality of painting, lighting and compositing could be exactly the same but the audience will readily accept and even ignore the house matte painting. It's not calling attention to itself and since they've seen plenty of house they don't bother looking it over. The haunted house, especially if it's centered in frame and the full focus of the shot, will tend to be deemed as a VFX even if it were really built on the location. It's much harder to sell the audience on this since they have to suspend disbelief.
Even harder are things like dragons and other vfx that the audience knows are not real. Their subconscious knows it's not real but they readily accept all the other non-real things in a movie (dialog, actors, sets, etc) because those 'could' all be real.
Of course there are other things that can make realistic effects easier - you have a real reference(s) to the real item. By comparing photos or video there's no discussion needed about what it should look like and how each person imagines it. You have a direct reference to copy. It may take some work technically but you know once you've duplicated the elements that make up that image the audience will likely accept it.