I don't think hardware limitations really come into play, especially comparing OutRun and RoadBlasters. Both games can put thousands of colours on-screen, so the real difference is in the talent of designers.
Tatsujin's got a point. Japanese games look better, with better polish on the art. Culture has a
lot to do with it, and you can see the presence, or lack, of an "art" culture by comparing console/PC games from different countries. Compare old 2-D US-developed PC games with games made in the UK or Germany. It's like night and day. Compare the best US-made Turbo or Genesis games with even the most mediocre Japanese/Euro games on the same systems. The (US) art styles are inferior, and don't work. Sure, often Japanese games used
few colours, but US games often used
drab colours. I remember a period in the early '90s when every second Genesis game seemed to use a combination of purples, dark greys, and browns. Yecch!
(One of the reasons I was drawn to the Turbo at this time was precisely its bright, colour-cycling graphics.)
Japanese kids grow up drawing 1000s of pictures, copying them out of comic books, anime, Disney, etc. From a young age they are copying styles, and if they keep at it, they eventually develop their own style (hopefully). Japanese culture, being very visual, has bred a good pool of talent.
On the other hand, most of us in N. America grew up and never got out of the "shitty kindergarten stick-figure/blob people" phase. Sure, American comic books have their own realistic style and a storied tradition, but that just resulted in kids drawing the same kindergartener crap, just with more muscle lines on the chest.
Just compare the "envelope art" sections from old EGMs and from Japanese game magazines, if you can. Each country's gamers are their future game makers.