It is conceivable (though I certainly understand skepticism) that they use it for concept and placeholder art, proofs of concept and the like.

As always, the question should be whether the final product is any good.

For instance. You can try things out without first creating them by hand. Then you pick and choose and make the final version by hand.

Every other commenter under this seems to forget that stock assets exist and worked fine for decades without involving AI slop.

It's similar to the pre-vis stage of movie special effects. You're using basically anything available to create a facsimile of the final scene, to see if your framing and pacing work the way you intend to. In film, artists will often use action figures shot with their phone, because it doesn't matter if it looks janky since it's not a scene going in the movie to begin with; it's a test to see if your scene works at all. Game development and filmmaking share a lot of overlap in workflows these days.

Because development isn't exactly asynchronous by nature. If you are waiting on placeholder assets, you are blocking everything dependent on "what comes next". Even at the cost of going back to repopulate your assets with non-placeholders, you save a tremendous amount of time.

4. Indie developers who genuinely don’t use it.

Generated code is no different than generated imagery. They were both trained off stolen content and are both in a legally grey area. Both are equally immoral.

But just go with your Everybody else is doing it argument

This would never hold up in court, in part due to regulatory capture, but I think this is the only thing that would stop them.

Pirating the game and using those assets was always fine, no matter the circumstances, company, artist, or developer. Copyright and intellectual property is an illusion the capitalist class uses to exclude the poor from ideas they feel they can profit from.