Gen 2 (GSC) really does look like Ken Sugimori's old watercolor paintings brought to life
Not arguing which of the sprite based generations looks the best (all of them have their own appeal), but if we're talking which Generation best captures the "artstyle" of Pokemon it has to be Gen 2. One specific example for me is Ilex Forest overworld design; while not objectively bad in HGSS, I can't help but enjoy the stylistic choices in GSC that much more, with the purplish hue creating an atmosphere of perpetual dusk/dawn that you can't help but feel is supernatural yet comforting.
Especially when you look at all the promotional art made by Ken Sugimori in the early days, Gen 2 top to bottom captures that vibe perfectly. Yes the artstyle itself is loosely based on Akira Toriyama's style (the faces on the characters & Pokemon are a dead giveaway), but even then Sugimori puts enough of a spin on things to make it his own. Ignoring the massive impact the anime/manga series Dragonball & Dr. Slump were having at the time, Toriyama had also been killing it in the gaming industry for years at that point with RPG's such as Dragon Quest and Chrono Trigger, so it's no surprise his sensibilities would rub off on other up & coming artists at the time. Where Sugimori and the rest of the team were able to set themselves apart from the competition, is a combination of both the artstyle itself and the Pokemon world they were able to bring to life with said style. What makes Pokemon creature design so captivating is their deceptive simplicity, and this stems from both the "watercolor" style and the "silhouette" design philosophy. The genius of the "silhouette" design philosophy has already been discussed at length, but essentially each Pokemon needs to be identifiable by it's silhouette alone, which in practice gives every Pokemon distinction and presence in the minds of players. The "watercolor" based palette is also genius because it gives off an air of simplicity and accessibility that resonates with young children who would both at school in art class and in their spare time doodle their imagination away on elementary art supplies (crayons, colored pencils, watercolor, etc.), and even older people who no longer do so can still recall said experiences. To this day these design philosophies and sensibilities place the Pokemon creature design in a class of their own, and even when compared to creature design from games such as Dragon Quest which Pokemon took inspiration from, the end result is distinct enough that no one would notice without closer inspection.
All of the overworlds in Generations 1-5 are heavily inspired by the Mother/Earthbound series, but Gen 2 still takes heavy inspiration from Ken Sugimori's water color based palette to give a charming atmosphere to all the areas in the Johto & Kanto regions of Gen 2. Gen 3 still looks great but goes for a standard color palette closer to anime style, and essentially looks like Mother 2/Earthbound (and by extension SNES) graphics on steroids. Gens 4 and 5 pretty much are what Earthbound would look like if it ever went 3D, and whether you like the Gen 4 or overworld more is personal preference.
Pokemon battles in Gen 2 are quite literally Ken Sugimori's water color paintings brought to life, and has aged really well all things considered (if you really like the Gen 2 style as well I strongly recommend playing Emerald Seaglass). Gen 3 makes a solid attempt to deliver anime quality sprites but doesn't quite get there, and in Gen 4 is where we finally get HD sprites that truly look like they came straight out of the anime. Gen 5 sprites are inconsistent in quality, and ignoring idle animations both the front and back sprites are very pixelated when compared to Gen 4 sprites which are much cleaner.