''looks terrible'' is subjective. There are even now games being made in ASCII art. That was also the case with DF, when in it was freeware. Judging by the screenshots of the now paid release - I'd say it does not look half bad.
As to what's the appeal of the genre?
That's the case - DF was somewhat the first of it's genre. Have you played
RimWorld ?
The appeal is also subjective, but mostly it's - ''Here. Have a few ''settlers'' and some starting tools. Do what you want.''
For me it would be the colony and resource management. Others would enjoy the steep learning curve. Again others would enjoy playing with the games physics (You can make trapdoors that are activated with levers, stepping plates
and wire them in various way). Others simply enjoy how the AI acts
(Sims style). Others invented meta-play styles, such as playing for 3 days, then passing the save file to another, who then passes it to another, who passes it back - and you have to figure out, without pausing (!) just what they have changed in the meantime.
BIG HINT: if there is suddenly a big red lever with the letters ''DO NOT PULL'' - do not pull. It's almost guaranteed that thing is wired to TNT that is wired all over your colony...
What else?
Well, again, the game is open ended so you can find many many ways you want to play.
Elf traders might show up and if you offer to trade wood with them they treat it as an insult and declare war on you. Goblins may try to invade you. You can dig down to literal hell.
Really in this game you have to look past the graphics. =)
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Side note: there was once a thread here about ''what's the point of minecraft?''
That one was weird.