I’ve seen many interviews, awards ceremonies, etcetera where players are lauded for their acting abilities. Unfortunately a lot of them are given undue credit. The best way to demonstrate my point—my reasoning—is to give examples.
An actor who was a police office for 20 years before becoming an actor, who then goes on to play the part of a police officer and does a terrific job has done very little. They would not likely deserve an award for their portrayal of a cop because they did not need to act, the character was too much like their own self, and so little acting talent was at all required. (No, I’m not talking specifically about Dennis Farina, I like him a lot and he gives me hope. He’s good but I would not credit him for his role on Law and Order nearly as much as say, his role on In Laws.)
On the other hand, an actor who is terribly shy and introverted who then plays an outgoing life-of-the-party and does a terrific job has done a lot. They would definitely deserve an award for that job because the character was so different from themselves that they had to really work for it, hard. (No, I’m not talking about myself, I wish I were.)
Here’s a real life example: Tara Reid is a member of that group of young starlet/socialites of Hollywood who constantly get into trouble. Most people would agree that she is anything but intelligent. When she is out and about, she usually embarrasses herself with the things she does and says. She did try to clean up her act and said that she would stop partying, but nobody was surprised when she quickly went back to her old ways. While she may not be the best actress in the world, many of the characters she portrays are distinctly different from herself. It’s not so much how well she portrays the characters that is relevant here as much as how much she has to put her own personality aside to play such a different character. She may not win an award for her roles, but you cannot argue that she must still be a pretty good actor to play someone so different from her default behavior.
So in summary, given that a performance was magnificent—convincing, realistic, believable, etc.—then the determining factor of whether grand applause is merited or not is in how different the character is from the actor. The more different, the more acclaim.