As exciting as this stuff is, I don't get how it could ever lead to anything interesting. Seems like an endless stream of tell-don't-show and fluff to me.
No more pre-defined dialog trees for NPCs and more reactive interactions. An example from BG3:
Tap for spoiler
you can find evidence that Isobel, the cleric who keeps Last Light Inn safe from the Shadow Curse, is the resurrected daughter of that act's boss.
But you can't talk to her, or anyone, about it, since those conversations were never written. With a system that generates NPC dialog on the fly, based on context and the NPC's pre-defined parameters, you could.
You could, but it will never lead to anything. It's guaranteed to be fluff. It may not even make sense or feel like a good payoff because it's just generated. No one wrote it with any intention. See what I'm saying?
That's assuming that the generative technology remains stagnant. I wouldn't be surprised if, eventually, the systems get complex enough to conjure up entire minor quests at runtime. Honestly, it's just a further development of procedural generation, I don't see how it's going to stall out at "meh dialog".
That's not the point I'm making. You might be right, but it's all theoretical. It could just as easily stagnate and become a dead end. There's really no way to know until it's been tried. I'm just reacting to this technology as it currently stands, and you'll note I did say it was exciting to see as well.
I see where you're coming from, but also think it's a tad hasty to say it'll never lead to anything but fluff. Excitement should be nourished, cause it's the people who are excited about new things that will explore what could come of it. Now let's give 'em time to cook.