The game doesn't have much immersion when it comes to combat. The stab doesn't appear like it should do much damage. The reaction to a stab is the crabs take a couple of steps back and a sound bite plays. But I'm just not sucked into it enough.

There's nothing wrong with crabs being unimpressed by sword stabs: your spritesheet represents a weak (but presumably fast) attack, and crabs are well armoured.

There's also nothing wrong with spritesheet based animation, but in your case the 64x64 maximum sprite size could be a limitation; as suggested, you can place the sword and maybe the arm in a different sprite. You probably need pixel-based collision shapes rather than polygons.

Maybe the quality of your graphics and animations is simply not adequate for your standards of "immersion". For example, does the combination of blond guy, sword and crab look like there has been a forceful blow, with some exchange of momentum? Does the crab attack show pincers around the character's legs?

1. Each frame is only 64x64 pixels, so there's not an awful lot of room for sword attacks. For this reason I've had to keep the sword pretty short and the only animation I managed to fit was a simple stab.
2. The game doesn't have much immersion when it comes to combat. The stab doesn't appear like it should do much damage. The reaction to a stab is the crabs take a couple of steps back and a sound bite plays. But I'm just not sucked into it enough.

1. You can add a temporary adjacent sprite, if your 64x64 box isn't big enough.

2. Sounds like your animations need more work. Maybe this thread would be better off in the art forum?