I think there are two basic biological aspects of the human eye that matter here:
- focus
Your eye is a lense that can be contracted and expanded to foucs the light falling onto your retina for optimum detail. The right contraction depends on the distance of the object. However, although your eye can focus quite quickly, if an object moves to fast, you can't focus on it properly, and it will stay blurry. This is one important part of motion blur, that is then amplified by the way the brain processes this data. But if people employing motion blur concentrate on the focus part, the motion blur effect already gets much better.
This is why, imho, it is and should be working closely together with depth-of-field effects and other focus related effects.
Of course, normally you see with two eyes, which allows the brain to form a more detailed 3D view. That's a wholly different story though, but probably shouldn't be forgotten completely either.
- reception to movement vs reception to detail
The center of your eye's retina is more receptive to detail and less to motion, and the outer rims vice versa. This partly makes sense from the way the lense can focus something better in the center of your retina, and it makes things in your peripheral vision inherently out of focus. Therefore you see a lot of motion blur effects in (racing) games occur on the edges of your screen, so that it covers your peripheral vision and attempts to fool it into fast movement that you cannot focus on.
At least, that's how I understand it.