Well it's not like they're looking at their actual faces, they're looking at an in-game avatar that's often highly sexualized or otherwise very pretty

I think it's also to do with how photogenic someone is. I'm the same as you, my photos/videos/voice always feel weird and awkward to me. The other day I came across this relatable story:

My mother is gorgeous. Stunning, even. She was homecoming queen in high school and has the smile of a true crime cliché (that is to say, it lights up a room). Blonde, razor-cut bangs frame her big, brown eyes – rimmed in her signature liquid liner, always – which literally twinkle when she laughs.

There is no photographic evidence of this.

I cannot make sense of it, but something happens to this dear, beautiful woman whenever a camera comes near. Her face contorts at the click of a shutter. A combination of the following features appears in every picture she’s ever taken: squeezed-shut lids. Crossed eye. Eyebrow askance. Elvis lip. Cowlick. I sometimes insist a particular picture isn’t as bad as she thinks; I’m lying. Her driver’s license photo? Horrendous. Her Facebook profile picture? A close-up of the family dog.

I take comfort in this whenever I come across a less-than-flattering image of myself. Photos do not reflect reality, I think. Just look at all the terrible pictures of Mom!

When you’re Nanachi, you enjoy looking in the mirror.

Theres no other feedback of your own avatar except for viewing it, if i am trying to immerse my self i wanna make sure i dont look jacked up.

Source: me, i play.

I mean, in VR you're really just checking how well you did your avatar. There's a sense of accomplishment in doing something that looks like you with a very limited set of tools. Haven't tried it in VR, but I know the exact feeling from The Sims series.