I'm not what you'd call a deeply "immersive" referee. I am big on describing things, sometimes at great length, but I don't do it in a way intended to "transport" the players into the game world. ... I prefer to maintain a distance between myself the game world and it's a distance my players maintain as well.
Then Brunomac at Temple of the Demogorgon threw his hat into the ring discussing how immersion doesn't require the players to be actors. This isn't Mind's Eye Theater, ladies and gentlemen.
I think this is one of the reasons I'll never be a very good Old School gamer. I'm very much a child of what Grognardia James calls "The Hickman Revolution." No, this does not mean that I enjoy the railroad-style DMing that Hickman presents in the Dragonlance modules. Personally, my DMing style follows more closely to what Justin Alexander calls "Node-Based Scenario Design" (although he describes it better than I could).
I'm not a fan of organic character development. Thus, the whole 3d6 rolled six times never really appealed much to me. I've done it on occasion, and I've rolled up lots of Elmer Fudd characters, some of whom survived, others who died before they hit third level. But I've never actually managed to roll up a character I could immerse myself in very often using that system.
The best characters I had ever played were ones I designed from the ground up, and ironically, they were all for the Forgotten Realms. One was a ronin samurai fleeing dishonor, another was a Mulhoarandi (read: Egyptian) priest of Thoth who believed magic resided in all of us and taught people how to draw it out of themselves, another was a halfling archeologist (read: rogue) who wanted to hoard up enough treasure to open an museum and start a university, and another was a gnome artificer (a 3rd edition prestige class) with dreams of building a time machine. These were all characters who had distinctive personalities, goals, and reasons for adventuring. Each was designed before I even picked up the dice, just through brainstorming and inspiration. Watching a movie or reading a book would spur ideas in my brain that resulted in a desire to play a certain type of character.
When I play an Old School game, the whole 3d6 thing usually results in me not being able to play anything like these characters. For example, to properly play Locke, the halfling archeologist, I would need to roll up a halfling thief (assuming we're using advanced rules where races are not classes), and pour all of his skills into opening locks and disarming traps. He'd need to have a decent dexterity (otherwise he'd have little aptitude for this sort of job), and a high intelligence (given his desire to study history and advance the profession of archeologist). The other ability scores are not that important, but one fudged roll in Dex or Int results in me not being able to play him whatsoever. How can I justify playing an archeologist with an Int of 5 or 6? It's nonsensical.
Thus, the ability to play out a character idea which had inspired you at some point prior to picking up the dice is pretty-much impractical in an Old School game. This is one inhibition towards the immersion-factor of certain players. It helps me to be playing a character I like, one I'm inspired by and can easily envision. I play role-playing games because I like to imagine doing things and seeing things that I can't in real life. I like being part of a story that is fantastic, and exerting some kind of influence over the game world.
This is also one of the reasons I love established settings, especially Dark Sun and The Forgotten Realms. I especially love The Realms because it is so heavily detailed. While some Old School DMs find the idea horrifying, I find it intriguing. The setting is alive, integrated, and whole, and it only scratches the surface. Ed Greenwood is to The Realms kind of how M.A.R. Barker was to Tékumel. Grognardia James' once commented how Barker could just transport himself to his own world and see how people interacted with one-another and come up with connections, histories, and the like. That indicates that there is a level of detail and life that exists in the game world. Because of its size and its incredible detail, I've found The Realms to be a fascinating place to visit. Unfortunately, the plethora of cheap TSR (and later WotC) novels set in The Realms inevitably tend to disappoint (with a few exceptions, like Grubb's/Novak's Azure Bonds), I usually find myself going there in daydreams or just wandering through the different supplements and sourcebooks produced by TSR. The Realms is a setting where, once, in high school, our party decided we were going to just wander around and visit different cities, seeking adventure. Literally. We wandered around, did odd-jobs (often not involving killing, believe-it-or-not), and just experienced the world.
It was in this game I got the inspiration for the "Big Score" that we never did get to pull off--set up a joint-stock company, hire a merchant ship in Waterdeep, sail it all the way to Kara-tur, load up on exotic spices from the Orient, see the sights, get into trouble, return with our cargo, and retire filthy stinking rich. No dungeons. No crawls. No stealing jewels from goblin idols. No searching rooms for traps. Just a voyage to the opposite side of the world looking for spices that would make us more wealthy than kings. We never did it, but that journey would have taken us across seas, to ports all over the world of Toril.
Yes, the Old Schooler might say, you can do that in any homebrew setting. But I beg to differ. The Realms grew out of a decade of dozens of people writing and tying disparate campaign ideas together. Boxed sets and sourcebooks piled together to create an enormous world full of thousands of cities and locales that defined the setting and brought it to life. What many gamers consider bloat, I consider depth and breadth, vitality, and a sense of realness. I do not feel nearly as inspired to try that "score" in any other world. Abeir-toril is so big and so detailed that a DM could literally turn that merchant voyage into a campaign that could last a year or more, because there are so many places to stop on the way. Just go google up some maps of Al-Qadim, Kara-tur, and Faerûn. Start from Waterdeep. Calculate distance and travel times. Roll for random encounters at sea. I guarantee that before the ship even reaches the coasts of Calimshan, the party's vessel has had at least one fight against pirates (probably out of the Nelanther Isles), made port at one or two locales on the Sword Coast or the Moonshaes, and possibly very nearly wrecked in a storm while traversing The Race. That's good for at least one or two months of solid gaming right there, and you've not even left the coasts of Faerûn, yet.
But the reason for such inspiration and immersion? Simple: Familiarity and accessibility of the material. The player cannot access all of the detailed information a DM of a homebrew setting might have. Therefore, his ability to become inspired by the setting details is limited unless the DM sets about writing a multi-volume handbook on his world. The problem is, this somewhat flies in the face of the entire system of Old School world-building in the first place.
See, Old School world-building is predicated on the dungeon. The party has a base of operations, such as a city, castle town, or village of some sort. Nearby is a dungeon for them to explore. Gradually, in a slowly widening spiral, the map of the surrounding world gets larger and the history gets filled in. Grognardia James has been excellent at describing the gradual growth and development of his setting, and I believe that his world-building is very much in-line with general Old School tendencies.
While I can enjoy that sort of game, it doesn't really scratch that itch I have for whole, complete, consistent and persistent setting material.
In addition, as a DM, I also prefer to run games based around a theme or idea, and this also is very anti-Old School. For example, I had once designed an Eberron campaign in which the party members were all to somehow be tied to Morgrave University and specifically a certain professor who vanished into the jungles of Xen'drik (kind of like Dr. Livingston). What I was after was a pulpy sort of Solomon Kane, Indiana Jones, Heart of Darkness, Tarzan, Alan Quartermain type of game, in which Xen'drik was a kind of analogue for Africa, and the characters were set to explore its darkest depths. This being said, certain kinds of characters would not have fit well with the kind of game I wanted to run. This doesn't mean I wanted to railroad the characters--on the contrary, I love giving my players free rein to pursue their objectives however they wish. But in order for the theme to operate successfully, the players have to buy into the notion that the game actually has a theme, and then create characters accordingly. This is very antithetical to Old School DMing and campaign design.
In addition, I don't actively seek to kill the characters. Danger exists in any game I DM. However, I find it more fun to see interesting stories evolve out of the players interacting with the world. I'm much more interested in seeing how they solve problems and deal with their surroundings than whether or not they can successfully make it through an ingeniously lethal dungeon. I try not to fudge dice rolls, and if characters die, they die. But I don't particularly want to run a game in which there is a certain level of antagonism between me and the players. For me, role-playing is about exploration and interaction, and is an immersive experience. Hence, while I can enjoy a good Old School game, I do prefer my games to have a certain late-1980s/early-1990s feel to them.