The main point of those exaggerated stuff in training is to make you understand the concept of the move, as well as the essence of the art. For example, a cat stance in practice has you putting all your weight on your back leg and sticking your front leg out far in front of you, as well as bending excessively low. That's to make you understand how it works, and your teacher will show you what it is for. But, in a real life situation, say this is before you've been attacked, and you're casually standing there but alert at the same time, you might assume the cat stance, although potential attackers don't know you're in any kind of stance. That's because you would disguise your stance, you might stand up casually with hands in pockets or whatever but still have all the weight on your back leg, front leg ready to strike.
That's just one example. Another might be for the high kicks. We might train to be able to kick really high, but if our target in a fight isn't that high then why bother swinging the leg that high? You'll still use the same technique, just not go as high.

In real life, fights are unpredictable; anything can happen. It's highly unlikely that you will ever get to use those blocks or throws or locks EXACTLY as you trained them in class. We train in class exagerated so that we learn the fundamental movements of the technique, then since we have a good understanding of it we can perform it differently but still retain the fundamental core of the technique in a real life situation.

I hope that this answers your question!

The game did a great job immersing you in the Asian setting. It really felt like being in one of the Chinese martial arts movies with the grand ornate environments. I wonder how the graphics look now compared to current games.