PCs were definitely at a disadvantage for anything involving a lot of motion, like arcade-style games, platformers, shoot em ups, fighting, and racing games. But the PC did do well at puzzle games like Lemmings, text+graphics games like King's Quest, and sims like SimCity. That disadvantage was gone, at least on a technical level, by 1992-94.
I think PC graphics had two major leaps forward in this era: VGA in 1987, and VLB graphics (on 486 machines) in 1992. The former brought an expanded colour palette, and the latter brought enough memory bandwidth that you didn't need dedicated blitter/sprite chips.