Just War games are fairly straightforward. The player fills the role of the "good guy". Ethically complex Just War games may give reasonable grounds to doubt whether the violence is truly justified, but in general the dominant social norms are respected. Situated context games take a murkier approach. In these games society may or may not find the violence justified, but the player is given a grounding in a character for whom the violence can be understood if not approved of. Games of this sort solve the "how do I justify simulating mass murder and carnage" question by giving a reason that can be strongly identified with even if it runs counter to the rules we govern our societies with. Examples can be seeking revenge for a grevious wrong, being a member of an unfairly oppressed group, or simply setting the game outside of a recognizable social order where nature is red in tooth and claw.
The Grand Theft Auto (GTA) games are the most popular examples of this group. They have received a lot of public attention for their violent and anarchic content and for their refusal to justify the violence according to rules that established society would find acceptible. I purchased the GTA series recently in large part so I could include them in this post. That experience was moderately successful, in that I played enough of GTA: San Andreas to get a feel for how the game was situated. It was less successful in that interface and control issues kept me from enjoying the game to play more than a few hours. I want to emphasize that my lack of enjoyment for this game was due more to trouble configuring an Xbox 360 controller to work on the PC than my dislike of the setting or the role I was playing in the story.
In the game I took on the role of a former gang member who returned to his old neighborhood after a prolonged absence. He discovered that the police were corrupt and his friends and family were set upon by police, crack dealers, and rival gangs. Through violence and intimidation the character achieves respect in his 'hood and sets about restoring the status and fortune of his old gang.
From one point of view, GTA: San Andreas is more honest than many just war games. That is, it doesn't offer up a simplistic view that the world is in a conflict between 100% good forces and their 100% evil enemies. Instead, one views the world of San Andreas as us verus them, and success is a zero sum game. I'm not in a position to say whether or not the violent anarchy portrayed in San Andreas is an accurate retelling of life in Compton in the early 90's, but I can say that while I empathized with the plight of the people in the game, I still can't say that they are good by most measures.
San Andreas doesn't attempt to tell the player that the violence is right, it shows the player that the violence exists in a context and allows players to engage in a violent fantasy of letting their will to power run unchecked. In the end, one's opinion on the justification of violence in San Andreas probably corresponds to one's opinion of whether such fantasy is a release or a sin.
The Elder Scrolls IV: Oblivion escapes much of the public critique that the GTA games have enjoyed. Largely, this is because this particular role playing game is clearly fantasy and does not closely simulate actual Earth-like conditions. Still, one has the option of engaging in many of the same sort of violent acts that GTA portrays. One can choose to play a straight-arrow or one can choose to play an amoral killer-for-hire. Oblivion gives the player some freedom to create their own context and the player can choose the rules they will obey. For example, if a player chooses to play a hero-type character she can take quests that have her rescuing innocents and punishing wrong doers. On the other hand, players can also choose to murder indescriminantly as long as they avoid the eye of the authorities.
Criticism of this kind of contextual violence can range from outrage that the game does not filter its content through the current dominant ethical framework to noting that for all the "freedom" touted in this kind of game, the player really doesn't have the choice not to be violent. At best they can choose a particular set of violent acts they approve of.
From my perspective, Oblivion is rather empty when it comes to ethical content. It takes few stands and the choices offered the player lack substance. Don't get me wrong, I enjoyed the game and played a few different kinds of characters and enjoyed most of them. I just didn't find that it made me think about my choices in very interesting ways. It avoids most kinds of ethical conflict merely by being bland.
On the other hand, playing GTA: San Andreas raised a lot of questions not all of which I have answers for. This is the source of its potential ethical impact on players, as they find themselves playing a man trapped in a savage lifestyle, they confront situations that do not have easy (if any) ethical solutions. I certainly did not get the perception that playing GTA games will help anyone to act more ethically outside of the game world, it does cause players to think about issues in a complex way that avoids the simplistic rhetoric of just war games. This may not make it good, but it does make it interesting and thus useful.