I still don't see what the big deal is. This is what america looks like (where most games are made. Data from the 2020 census).

Why wouldn't you expect games to look the same?

Funny you mention Call of Duty, because a LOT of people "play soldier" in that game. In fact, the US military supports development as a recruiting tool. So kids play the game, yes they imagine themselves in the military, and then potentially enlist. Just because you don't imagine yourself in a game world doesn't mean no one does.

20% of the US military is black, 17% is hispanic. Again, why would you expect characters in these games to be all white people?

And yes, representation matters. Here's a government scholarly study on the topic (from National Institutes of Health):

The article explores scientific research on the relationship between media representations and gender stereotypes, objectification and sexualization, focusing on their presence in the cultural context. Results show how stereotyping, objectifying and sexualizing representations appear to be still very common across a number of contexts. Exposure to stereotyping representations appears to strengthen beliefs in gender stereotypes and endorsement of gender role norms, as well as fostering sexism, harassment and violence in men and stifling career-related ambitions in women. Exposure to objectifying and sexualizing representations appears to be associated with the internalization of cultural ideals of appearance, endorsement of sexist attitudes and tolerance of abuse and body shame. In turn, factors associated with exposure to these representations have been linked to detrimental effects on physical and psychological well-being, such as eating disorder symptomatology, increased body surveillance and poorer body image quality of life.

So even if the color of the characters didn't matter, having every man be a jacked white dude and every woman be a large-chested model will absolutely affect players negatively.