I imagine the jump from crude drawings and grainy nudes to actual sex would be so huge that it would completely throw people off. Was there anything in between?
There is at least one flaired expert (a mod, actually) on this sub who specializes in pornography and obsenity, /u/vertexoflife. While we wait for them, or another expert to weigh in, I think it will be helpful to correct a couple of misconceptions you seem to have about the nature of visual culture before 1996. Please consider every link that I post in this comment extremely NSFW.
Photography was invented, more-or-less, by 1840. Before that pornography would not have consisted of "crude drawings," but actually would have been created using the same visual techniques that were used [in that time and place] (https://upload.wikimedia.org/wikipedia/commons/0/00/Carracci_Jupiter_et_Junoncrop.jpg) (please note, there are three links in that sentence).
The very first photographic images were usually printed on metal and have deteriorated considerably, so they may appear "grainy" to our modern eyes. By the time of the later nineteenth century, when gelatin silver photographic printing (still used by art photographers today) and other more "modern" techniques were available, photographs would have been quite clear, including for pornography.
When film was invented ca. 1893, you had better believe that pornography was not far behind. Once again, while early film may appear "grainy" today, this is a result of poor preservation due to the inherent chemical instability and ephemeral status of film. When film has been well-preserved, the images are quite sharp. This Youtube video claims to be the first pornographic film, by a very famous pioneer of filmmaking named Georges Melies. I don't know enough specifically about early pornography to evaluate that claim. However, you will see in the suggested videos in the sidebar of that link there are a number of films, all of which are quite "sharp." Indeed, the video technology of the kind available in 1996 would often have been less sharp than 35mm (or even 16mm) film that would have been common until ca. 1980. The advantage of video over film is that it is cheaper and has a lower barrier to entry. Film is sharper than most video technologies available by 1996. I'm afraid that most of the history of digital video is covered by the twenty-year rule, so I must stop my discussion there.
Anyway, I look forward to contributions of people who can contribute to the discussion about the history of pornographic representation in more detail, especially around technological inflection points (single-point perspective, photography, film, video), but I wanted to correct what seems to me a bit of presentist bias - the idea that the technologies of representation available today (or, shall we say in 1996), are necessarily the "most real" or the "best." People were indeed astonished by the lifelike qualities of early film, even if today we see it as "grainy" or otherwise lacking in naturalism.