I tried two demos of machine learning AI NPCs, and they didn't convince me AI will lead to anything that immersive sims like Deus Ex haven't already done better
A bunch of generative filler text won't games more immersive. Maybe there is some scope in giving the model hidden details you need to coax out of it LA Noire style but currently everything seems a bit gimmicky.
Maybe it could be a benefit for asking questions to NPCs devs didn't think you'd want to ask that. Like asking a city resident where the market is. Probably not today but perhaps one day.
If you give LLMs that much latitude you are going to have your NPCs spread conspiracy theories and fascist crap left and right in your game and a PR crisis on your hands.