It's realistic, but bad realistic- for me anyway.
I made myself a cdm for bolton, 19 and 67 overall or something.
by the time I'd won the prem a couple of times, the europa cup once and the champions league once, He was like the 3rd or 4th best player in the game. He moved to real madrid and was like "I want to win more trophies". but I win everything!
I think they do have reserve and youth games simulated in, because young players get better even when they don't play.
But yeh, morale is a real problem with a big squad.