Ok first off, yes Unity is used in a variety of well-known and popular games, but small games though.
Unity is the best engine, imho, for beginners in 3d Game development. It's 100% user friendly, and it's community helps a lot, they also have a Unity Answers website, where you can post your questions and tons of people can help you out, I never posted one, but I'm a frequent user since many of my problems were other people's.
About comparison, You can't just compare Unity to Cry Engine. Cry Engine is a proprietary engine and Unity is free and has a pro-license.
I used Cry Engine once, Didn't know what I was doing though, but I think it gives 100-0 to Unity in terms of performance, graphics and overall development, or else Crysis would be using Unity right?
But don't take this as a negative hit for Unity, Unity is not meant to compete with Cry Engine or Frostbite. I think a better comparison is Unity vs UDK, they are compared a lot by people and why? Because they are more or less at the same level, they are both free, with some restraining ofc, and they are both great, but I would still say UDK beats Unity lets say 3-1.
I've been using Unity for 2-3 years now, and I must say I like it very much, the only downside is that your game won't look top quality graphics with the Unity Free... but UDK is 100% free, every single power of UDK is free, but you have to pay royalties to them if your game makes more than 100k i guess. But like i said, Unity is user friendly, more than UDK imo.
To complete, Unity is your choice if you want to have a nice looking game, well built, deploy it for Mac, PC, Web browser, Linux, Android, iOS, PS3, Xbox 360 with a single button and it's definitely the place to start on desktop game development.
I hope my review on it gives you a good insight on what it is and what it can accomplish for you.
Just as a side note here's my ratings on what I've used on Unity:
Keyframe Animation - 6/10
Lighting (Free) - 4/10
Particles (Free) - 6/10
Scripting - 10/10 - You can pretty much code whatever you want, however you want.
Level Design - 8/10
To complete #2: Now that I made my review on Unity, I think if you want to create a High Graphic Quality game you need either to buy Unity Pro, or go UDK from the bottom. (I've tried learning UDK, but I just love Unity for its simplicity and UDK is much different).
I would love to hear some other opinions though
@EDIT
I mentioned Cry engine being proprietary not in the meaning as you can't use it, but I think it suits on the proprietary list of engines since it's a SUPER AAAAAAA Engine.