But the essence of great fiction is to explore who we are and what stuff we are made of. It does this by positing a moral dilemma which requires courage or some other virtue, then watching a credible person master (or fail) the test. Science fiction in particular gets to play with the laws of physics, to tweak the rules of the game and see what happens. But it works because we can imagine ourselves in the heroic role, and say "Would I do that? Would I make that mistake or show that virtue?" They are still real humans in those key positions. The captain of the Enterprise in Star Trek was the fully human Kirk, not the half-Vulcan Spock, whose presence offered Kirk every opportunity to show what it means to be "human" (which often meant being not quite "logical"). Superman only works as fiction because he is vulnerable, so that we can empathize with his own ethical dilemmas; Superman with no kryptonite is not interesting.
But in the Matrix, the whole premise for the story is that the Matrix is pure fiction. Its citizens only imagine that they are there. In reality (so the story goes), they are sitting in some life-support pod plugged into this giant computer simulation designed to keep them happy and producing life force to power the machines. Never mind that if there is not enough solar energy making it through the nuclear winter to power the machines, where does the energy come from that keeps the humans alive? Every one of us lives on solar power, chemically converted to sugars and fats by the plants, and then converted back to energy (at a considerable loss) by the metabolic processes in our cells.
So if it's all a computer simulation with no reality, where's the moral challenge? Where's the kryptonite? What is there to imagine ourselves in? Mr.Smith is a self-replicating program (essentially a computer virus) with great fighting skills, perhaps greater than Neo, so there's the thrill of combat, human against program? They never quite explained why it's bad to die inside the matrix; why not just come back in another life, like the computer games of today? But since it's all fiction (inside the fiction which is the movie), the programmer can make the program do anything he wants: leap through the air, stop and/or dodge bullets, oh yes, and skillfully fight conventional martial arts without using any of the magic tricks that stop bullets and enable the players to fly through the air (why? Perhaps it's cool).
Ultimately, the programmer is God (he even says so in the movie), able to make any rules he likes. Except of course when a rogue virus like Mr.Smith gets in and runs amuck. A couple decades ago there was a popular game among computer programmers called "Core Wars." The idea was to give each programmer a place in memory to put their starting code, and the last program still running won. Essentially you programmed your code to smash holes in your opponents' programs, so they halted. It turned out the winning strategy was to replicate your program all over memory, and the smallest most nimble program won. Then it became uninteresting. The Matrix is Core Wars writ large.
But we viewers are not participants, we are not programmers in the contest,
we are only passive, waiting to see if our hero Neo is smarter or "stronger"
or faster than the enemy program. At least in football, the guys in the
bleachers know how to play the game, and they can imagine and empathize
with the physical effort being played out in the field. I'm a programmer,
and even I don't have any way to imagine myself in the shoes of the Matrix
protagonists. That must be why they kept the martial arts without magical
helps (except maybe a little unreal leaping); at least we can imagine ourselves
able to do that.