The first time I remember all of these factors really coming together at once was probably the final level of NiGHTS Into Dreams.
In every prior level of the game, you enter a distinct and fantastical dream world as one of two playable children, but you don't play as either of them for very long. They're very limited and grounded in what they can do, and you're on kind of a hard time limit before an alarm egg will catch them and instantly end the game. You're intended to free NiGHTS from his prison at the start of each stage, upon which control passes over to him and you're free to use his many acrobatic abilities to gracefully fly around the stage properly and complete the actual level objective. If you're playing the game correctly then you're only using the children for mere seconds in each level.
The final stage starts off very differently, though. Even though it takes place within a dream like all prior stages do, its world isn't a reality-bending fantasy, but one that heavily resembles the city in which the children live, implying that the villain of the game is getting close to achieving his goal of breaking into the real world. He briefly shows himself (for the first time ever up to this point) at the start of this stage, forcefully prevents you from freeing NiGHTS and flings you across the entire stage, where your only course of action is to jump off a cliff.
...Upon which your character finally amasses the courage to fly him or herself and clear the final stage without help. It's very well put together: a fine case of show but don't tell (NiGHTS has no spoken or written dialogue) with some good theming about overcoming your nightmares. The music is great (and makes heavy use of the game's main leitmotif), and even though the process of flight with the children is new and you're now controlling them much in the way that you would be controlling NiGHTS, the other minor gameplay details that differentiated them from NiGHTS (such as their inability to paraloop like NiGHTS can, and the magnetic way in which nearby items are attracted to them) are still respected. The final level is also structured slightly differently in that you're incentivized to race to the end as fast as possible instead of milking the timer for points.