In my opinion, AI is fantastic for worldbuilding. I have been a tabletop DM for a really long time, and I can accomplish the same kind of high quality and substantive work in 2 hours that used to take me 8. Whatever the AI gives I end up molding into something more through more questions.
I will say I am diverging enough from the AI generated content to have it be its own thing, and I am not doing it for content I would be paid for; it’s all purely side projects I play with my friends. I think that it is a super powerful brainstorming tool!!
The other day I needed a shadow demon to explain in a cryptic way that someone has pissed off a being living in the space between dimensions by annoying it with their interdimensional travel, and now it's retaliating. ChatGPT did a great job.
I have had several instances in DND campaigns where I ran into a point of writers block and didn't see a sensible way of bringing several narrative threads that developed on their own back together or even get them working together at all. ChatGPT has been a huge help as a sounding board for that. In doing this, it also helps to quickly get an idea of fleshing out characters further.
Whatever it replies, I usually only take it as some more inspiration and adapt it accordingly. Sometimes I use it to let it write letters and notes in the name of my NPCs though, just to get a larger variety in styles instead of everything being in my own style. Also quite helpful for that.
I find that descriptions of characters are often very cliche(stoic man has big muscles), and in some cases negative stereotypes are an issue(stoic man is an alcoholic). it's always good to keep in mind the potential unintended subtext the AI has created. My rule of thumb is to use it for generic npcs for my DND campaign and then to probe it for cliches I should be aware of when I'm developing the main cast.
Questions like "in media, what are some ways a stoic man is described? Are there any clear trends for them?" Gives back the typical cliches that, depending on the character, I may use or intentionally avoid.
But if I just need to describe farmers 1-12 then I'll ask it for physical descriptions of 12 different farmers, tweak things I don't like and call it a day.
I haven't used ChatGPT for character development, and I won't considering @Avarice's comment on its usage of rather cliché tropes. However I specifically used it to brainstorm government structures for the four countries in my world, which, I'll admit, does rely on some real-life geopolitical archetypes.
I already had three countries in place: a constitutional monarchy, a federated state, a semi-theocratic monarchy (with a touch of democracy), and a fourth one. ChatGPT suggested a "socialist confederation" which was quite unexpected for me. It also helped with brainstorming the structure of country #4's government, and even an outline of its constitution since there aren't many real-world examples I can reference.
LLMs can be useful for creative writing, just be aware of its limitations.