On-chain games are those where the entirety of the game state and game logic (not just in-game assets likes currencies and NFTs.) is written to the blockchain.

Consider Tic-Tac-Toe. The concept of turns, a 3x3 board, players and a sequence of three must be unchangeably documented as the rules. The history of player moves must also be recorded. On the other hand, the colors of the board and pieces, the shapes of the pieces (X and O can become Y and Z for all we care), the animations, the sounds, etc. can all stay on the client-side.

Putting all states and logic onchain unlocks all sorts of novel behaviors: - Smart contract-based players (as opposed to human players) that play the game. One of the earliest instantiations of this is actually MEV in DeFi. Trading is the game and MEV bots are smart contract-based players. Notice that in this case the smart contract-based players not only compete with each other, but also compete with human players. - Game mods built by third-party developers without fear of getting deplatformed. Mods are the lifeblood of Web2 games, and many generational games started out as mods (eg, Dota 2, Counter-Strike, and PUPG). However mod devs are at the mercy of the original game studio due to the permissioned nature of Web2 games. In fact many have gotten either de-platformed or would never have started modding for fear of getting deplatformed. Eventually, the game studio can become a game publisher. If Web2 history is any indication, it’s highly likely that the first successful onchain game engine comes from a successful onchain game studio. Think Unreal (the engine) and Epic Games (the studio). By the same token, the first successful crypto game publisher will also likely come from a successful crypto game studio. Think Steam (the publisher) and Valve (the studio).