Arcade games, often constrained by hardware limitations and compact designs, excel at environmental storytelling by leveraging every pixel and sound byte to convey rich narratives. Unlike expansive open-world games, arcades rely on subtle visual cues, background details, and interactive elements to immerse players.

For instance, pixel art in classic arcade games like "Pac-Man" or "Donkey Kong" uses color schemes, level layouts, and enemy behavior to hint at deeper lore. A flickering neon sign or a broken crate can suggest a dystopian setting or a bustling cityscape. Sound effects, like distant sirens or echoing footsteps, further enhance the atmosphere without explicit dialogue.

Modern arcade games, such as "Cuphead," blend retro aesthetics with layered storytelling. Hand-drawn animations and dynamic backgrounds subtly reveal character backstories or world-building elements. Even in limited spaces, clever placement of objects—like a hidden poster or a recurring symbol—can create a sense of continuity and depth.

Ultimately, arcade games prove that storytelling isn’t about space but creativity. By maximizing minimal resources, they deliver unforgettable experiences through environmental mastery.