Do video games have any benefits for things like on-the-fly thinking?
Before I attempt to answer this question, let me say that this is an area of inquiry that is interesting to many different people for varying reasons, so there are studies updating and refining our understanding of the effect of video games coming out all the time. What I write here is provisionally based on the research I have done so far.
Moderate video game playing has numerous important benefits. The most well-researched of these benefits is an improvement in hand-eye coordination. It is most noticeable in tasks that are similar to video-game activities, such as firing a weapon and operating vehicles. Young adults who play video games are more likely to score high on military sharp-shooter tests, for example.
Another important benefit is that children who play video games learn new schools more quickly. The practice of adapting to changing situations makes the brain more flexible. This article describes neuroimaging results that show that the brains of children who play video games are better developed in areas related to learning than in children who play no video games. This has a noticeable effect on academic performance, as moderate video-game players typically do better in school.
There are also some bad effects of video games, particularly among children who play excessively. The best known of these effects is that video gamers typically are more aggressive, defiant, and report more conflicts with their peers. Excessive video game playing can also lead to social isolation.
The take-away is that video games are good, but you should limit your exposure to them. All of the positive benefits of video games seem to be available to people who play as little as an hour a week. The bad effects are seen most dramatically in children who play more than nine hours per week. So, if you can keep your gaming to a little over an hour a day, you are likely to avoid serious problems. If you do notice that you are getting short of temper, you may want to cut back a little to see if the problem stops.