This sky just sucks, it’s so dull and samey…
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Having played all the Horizons, I think there’s definitely a difference in the atmosphere of each of them. Horizon 4 seems ‘brighter’. which allows the bluish tones to stand out more, making it seem ‘cool’, even in the in-game summer. Horizon 3 seemed ‘warmer’, since the tones allowed the more orange side of the spectrum to stand out. Appropriate, since the whole game was set in summer in Australia. Horizon 2 was likewise warmer, but had a kind of ‘haze’ to it. I could never quite put my finger on it, but it just seemed to fit perfectly with the architecture and the general atmosphere. Horizon 1 seems cartooney, going back to it after being accustomed to the later games. But having been to Colorado in summer, I can tell you that they hit the warmth and the haze of the desert perfectly. If you’ve ever driven those mountain roads, when you see it in-game, you believe it.
I’ve been to England, but I’ve never been to other parts of Europe or Australia. I get the sense that the choice of atmosphere wasn’t just a limitation of the programming techniques and capabilities of the time. I think they were a conscious choice to match the game environments to their setting. They give you a sense of being there, whether you’ve actually been there in real life or not.
I know what you mean about the skybox, though. Horizon 3 had a better one. The moon in Horizon 4 is too small over the horizon. When the moon is just over the horizon, there’s an optical illusion that makes us think that it’s bigger than it really is. But the moon in-game looks as if you’re looking at it through a camera, instead of actually being there.
The physics, the only way I can think of to describe the difference is that that Horizon 3 was ‘tighter’. Horizon 2 was pretty tight too, but you can feel the the progression and improvement between 2 and 3. Horizon 4 still has the basis of that, but they feel ‘looser’, as though they scaled back accuracy for a more arcade ‘feel’. Not just the unrealistic addition of breakable terrain, but the whole physics model seems ‘loose’ compared to the earlier games.
I also miss the Championship features of Horizon 3, though I’m glad they did away with how they did it in Horizon 2. You never seem to be able to go do whatever race you want, unless you do an online session. You just seem to go from one championship to another. I’d like to see the Horizon 2 road trips back again, but championships should be done more like Horizon 3. And I never really took advantage of the ‘car meets’ in either game, but Horizon 2 did those better too.
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The one main complaint I heard when FH4 debuted was “WOW ITS HARDER!”…when I replay FH3 now, it feels like I’m playing more of a NFS/Outrun type of game, whereas FH4 feels like I’m playing more of…well…Forza Horizon 1, leaning in the direction (but not anywhere close to) the Motorsports titles. Its still an arcade racer (FH4) but FH3 was like…anyone could pick up and play it and do really well, FH4…you gotta use the brakes.
The Environment of FH3 is also…again…great in the series progression, but compared to FH4 I don’t like it anymore. Its got a city…its got the tropical area…and then it has a whole lot of nothing really connecting those areas. The main problem is the lack of verticality, which may be exactly how Australia really IS of course but… 
FH4 is the superior game, as it should be. FH5 should make FH4 look “Good…but” by comparison in the same way.
They are all stellar games, FH1 was the game that made me go “FINALLY! I can put away my copies of Project Gotham Racing 3 and 4!”…FH2 was, honestly, not a lot of fun for me…I didn’t really care for the european road system and it felt like a game in transition to what it would eventually become, FH3 which blew my mind. FH4 took me forever to even get into because I kept playing FH3…but once I made the switch and embraced the “harder” element of driving in FH4 and learned more of the roads…then I realized FH4 was the superior game. ANd unlike many, I really dig the seasons…especially winter.
I don’t feel the Spring, Summer, Autumn seasons really vary the map enough whereas Winter does…especially if you enjoy tooling around with a wheel.
But alas lately I feel like I’ve exhausted my Forza Horizon love…the map feels too samey…I want more roads. I’m almost ready to try and start forcing myself to like…ugh…LegoLand 
As an Australian, the visuals in FH3 look and feel like I am driving in Australia, the tropics, country side, beaches, Gold Coast, Byron Bay, Glasshouse mountains all feel as though I am there during summer. I think PG got it absolutely right as I played FH3 (Ultimate) nearly every day from release until after FH4 was released. There is nothing more I can/need to do in FH3, totally enjoyed the whole game. Sure there has been improvements in the game to make FH4 easier and it has better detail in the visuals. One of the important factors to remember is the lighting aspect and weather for both regions are different so both games will look different.