I always view regenerating health in more realistic shooters to be "near hits" or whatever... shake you up, but not a real kill.
I don't even really care about the realism. Realistically speaking, tending your wounds with a med kit is much more realistic than completely healing yourself naturally in a matter of seconds but that's really besides the point. The problem with regenerating health is that it makes games too easy and eliminates much of the tension and forethought that would stem from a finite health system. Sure, games with regenerating health
can be hard but only when you play on the highest difficulty and the game relies on horribly contrived mechanics to add challenege.
A ton of the time you can't hide easily... a ton of the time you are forced to kill something before it kills you because you can't get away and there is no health button.
Most of the time you
can hide easily. You don't even really have to hide. Just take cover for a few seconds. In most games, enemies behave defensively. They'll run to a cover spot and hang out there taking potshots at you. The only times a game with regenerating health is challenging is when the designers throw in cheap things like respawning enemies or enemies with 100% accuracy. In CoD4, you had both. In R6: Vegas, you had enemies that would magically pour out of closets and surround you when you hit the appropriate trigger. Both games used incredibly contrived ways to make the game hard in spite of the regenerating health. Games with finite health don't have to resort to such things in order to be challenging.