The Fiat Dino coupé was produced for a few years in the late 1960s and early 70s. It wasn't particularly fast, didn't star in any cool movies, and didn't have a motorsport career. Classic car enthusiasts remember it now for its crisp and elegant Bertone body, and the fact that it had a Ferrari-made engine, the same V6 found in its more famous and voluptuous namesake, the Ferrari Dino. It is a lovely car - a personal favourite of mine, thanks to a youth misspent reading classic car magazines - but there is really no reason for it to be in a video game.

Forza Horizon 3 Developer: Playground Games

Playground Games Publisher: Microsoft Game Studios

Microsoft Game Studios Platform: Reviewed on Xbox One and PC

Reviewed on Xbox One and PC Availability: Out now for Xbox One and Windows 10. Digital copy unlocks on both formats

And yet here it is in Forza Horizon 3. Why? I guess to delight people like me, who happen across it unexpectedly in a car list stuffed with esoterica, from dune buggies to wood-panelled station wagons to the three-wheeled Reliant van out of Only Fools and Horses. And because the developers at Playground Games really know about and love cars, which means knowing about and loving cars that are slow or forgotten or weird, as well as cars that are fast and glamorous and marketable.

But that makes Forza Horizon 3 sound like a game for anoraks - the sort of eccentric hobbyist's scrapbook that the latter Gran Turismos, much as I love them for it, have become. It's far from it. It's a racing game for everyone. You don't need to love cars to enjoy this game, and you don't need to be into the current racing game scene either, which seems squarely focused on serving hardcore genre fans' craving for authenticity. The cars in Forza Horizon 3 look and sound authentic, and up to a point they feel authentic to drive too, but they will all drift elegantly, they will all plough across fields and ford rivers without bogging down, and they will all survive jumping off cliffs with aplomb. Because those things are fun, and fun is more important.

I think the Fiat Dino is in this game because just looking at it makes you smile, and makes you think how fun it would be to drive a pretty car like that through coastal scenery at sunset. That's just one of many fantasies this game will fulfil for you. It is pure escapism of the sort video games excel at, and that anyone can respond to. It's an adventure, a lark, a holiday that lasts forever. It's competitive if you want it to be, and social if you're into that, but over and above that it's just inherently joyful, like a 16-bit platformer or an over-the-top arcade cabinet or a rambunctious open-world action game. It's here to make you smile.

You won't want to admit how much you enjoy gazing at your cars in Fozavista mode, opening the doors, studying the interiors and peeking under the hood.

The first thing about Forza Horizon 3 that will make you smile is its map. Like its two predecessors, this is an open-world racing game set in a fictionalised version of a glamorous real-word location; we've been to Colorado and the Côte d'Azur, and now we're off to Australia. Playground's artists have taken even greater liberties this time, condensing half this giant landmass into a map that's only a dozen miles from corner to corner. (It feels plenty big enough.) Diversity and epic scenery were their goals, and they've delivered. You'll drive over ochre sand dunes in the Outback, along brilliant white beaches, up thickly jungled hillsides, through rolling vineyard country and into a glittering modern city. It's a vivid landscape under huge skies, and it's quite breathtaking to look at. My colleague Ian put it best when he said that just watching footage of the game made him want to go on holiday. When you're away from it, you want to go back.

The road network is mostly composed of dirt tracks and curving ribbons of two-lane blacktop, with a solitary ramrod-straight freeway running east to west. It's a total joy to explore, and just as much fun to go completely off road into the dramatic 'playground' areas, like the building sites near the city or the rusting shipwrecks scattered across a sandy bay. The game's signature moment is your car splashing through water - whether it's an inlet on the beach or a rivulet pouring down a hillside in a rainstorm - to the accompaniment of a cooling roar, a shiver of feedback from the controller and a tug back on your speed. This moment is repeated again and again in Forza Horizon 3, and it never gets old.

As in the last few Forzas, AI drivers are 'drivatars' of other players - and you can now recruit friends' drivatars to your festival, which benefits you both.

The car handling in Horizon has always positioned itself carefully between physical heft, accessibility and excitement. If anything, Horizon 3 has the courage to lean a little further away from its sim underpinnings and towards the arcade. Steering is pinpoint-sharp and there's an eager encouragement towards drifting and tail-wagging powerslides, even in the most unlikely vehicles, though the cars still have a strong sense of weight and personality. Sim fanatics might not like it, but the entertainment value is off the charts. I've said it before, but comparisons to Bizarre Creations' mighty Project Gotham Racing series are both apt and deserved.

Once again, the game's conceit is that you're taking part in the Horizon festival of racing and music, and the airwaves are thick with shimmery electro pop, frantic drum'n'bass and crunchy alt-rock, all of it effervescent and upbeat. The structure has been tweaked, but is still driven as much by exploring the landscape as competing in races, or completing the Top Gear-style PR stunts. This time, you're nominally the boss of the festival, and the game is paced out by opening and expanding four hubs across the map, unlocking new race routes and events as you go. To begin with this makes the map feel smaller and less populated than Horizon 2's (it's not), but in the long run it's more logical than that game's endless cycling from one hub to the next, and endows a greater sense of progression.

The racing itself is free-form, largely defined by which car you feel like driving that day. Exhibition races set themselves up according to your current set of wheels, and you can tweak the parameters (but not the actual race routes) further by entering blueprint mode, and then uploading your event for other players to try. This feature feels a little half-baked for race events, but I loved the blueprint Bucket Lists, which allow you to set cars, routes and rules for one-off challenges; the community has already come up with some great designs that are well worth exploring. (I particularly enjoyed 'RAC Breakdown Simulator', which asked me to drive an appropriately liveried orange Transit van clear across the map in the rain without damaging it.)

If you fancy something more curated, the official Horizon championship series are designed with imagination and a mischievous sense of fun, with events for cars weighing over two tons, or costing under 15,000 credits, or celebrating great automotive rivalries like that between Aussie carmakers Ford and Holden. There is, apparently, an endpoint to all this, but after dozens of hours' play it's still a long way off for me - and anyway, the game is quite clearly designed to be played forever according to your whims rather than the designers'.

Car nerds will love the new 'upgrade presets' that allow you to fit certain cars with custom bodykits, transform them into 1000HP hot rods, or convert them to rally or racing spec.

For the first time, you can do everything in the game's festival campaign in four-player co-op. This is a very nice feature to have and can be great fun, especially with friends. It's been sensibly designed, too, with map progress tied to the session leader's game, but carrying back to your own, and event scoring adjusted to promote team effort rather than competition. (You're ranked in a race according to how many AI 'drivatars' you beat, and in time trials you must beat a combined time.) There are still some wrinkles to be ironed out of this mode, though. Cut-scenes and progression milestones for the leader interrupt the flow of everyone else's game in a clumsy way, and the matchmaking and networking seem finicky; in my experience, it's much quicker to find competitive than co-op games, and they're much more reliable.

The competitive mode, Online Adventure, is very similar to Horizon 2's Online Road Trip, and quite right too, because that was a knockabout triumph. The only changes made are welcome ones, grouping events into themed playlists (asphalt only, playground games only, and so on) and allowing you to vote on these as well as filter according to your preferences.

The other major novelty in what is, in all honesty, a very iterative sequel, is the advent of a Windows PC version under Microsoft's new Xbox Play Anywhere initiative. Although we usually review games on a single format, I was curious to try out Microsoft's vision of a cross-platform future - and also aware that Horizon 3 will be an exciting prospect for the PC community, who are well served with driving simulators but haven't had a decent populist racing game since the last Criterion-developed Need for Speed. The news is mixed, as you might have gathered from Rich's report at the weekend. Downloading the game from the Windows Store is a painful experience, and it requires a beast of a PC to beat the visuals or performance of the superbly optimised Xbox One version. There are some reports of instability, too, although I've had no trouble with it. On the other hand, wider steering wheel support than the console game is welcome, the game is solidly engineered and looks beautiful, and Microsoft's cross-platform tech is seriously impressive. Your game save seamlessly transfers from one version to the other, and there's no segregation of the game's community at all, so you don't have to worry about which version friends are playing. This is how it should be.

The delight the game takes in weirdly specific Australian car culture - just as the local manufacturing industry faces permanent demise - is sweet and infectious.

I could go on to discuss the Rivals system for time trial leaderboards; the auction house that lets players trade rare reward cars and custom tunes; the ever-thriving Forza community surrounding custom paint jobs; the return of the illicit nighttime street races from the first game. At time of writing, the weekly Forzathon events with prize car rewards haven't even started yet. There are so many things to do and ways to play Forza Horizon 3 that it seems like it might overwhelm the player, or lose its sense of purpose and identity as it tries to fulfil every desire anybody has ever had of a racing game. It is not usually a good idea to try to be all things to all men.

But right now, we need a racing game like this. We need one that we can recommend to friends who aren't dedicated to the genre, confident that it will dazzle and thrill them as much as any online shooter or action epic might - even as it serves multiple subcultures of racing and car fans. The team at Playground Games get away with it because amid all this added value and feature iteration, they never forget what they came here to do: put you on the open road, amid beautiful scenery, and allow you to let rip behind the wheel of something gorgeous or growling, obscure, iconic or insane. They came here to plant that big, fat smile on your face. Forza Horizon 3 is, quite simply, the best racing game around.