My take has more to do with how accessible the methods of violence are. Most kids playing GTA aren’t (dog willing) going to have access to an arsenal of fully automatic weapons or sporty cars. At that point, they might as well be using wizard magic. I think even a young kid can recognize that it’s fantasy.
But I remember in GTA3 (or maybe Vice City?), you could use a screwdriver as a stabbing weapon. That’s kinda fucked.
I personally remember trying a move from Mortal Kombat on one of my friends when we were rough housing when I was like 7. While he was on his back, I jumped (off his bed I think?) and landed with my full body weight on my knee on his sternum. Probably could have cracked a rib. Certainly knocked the wind out of him. Learned that day that even the non-stabby bits of MK should stay in the pretend realm.
To some degree, I know kids will try to emulate what they see. If what they see is fantasy, nobody gets hurt.