It's when quickly forget you're in a videogame world because the animations, interactions and A.I. with and in the world are harmonious/realistic.
Of course it's just a demo played in one specific way you could argue it's scripted because of how good it looks...
I actually don't know what I'm talking about but I'm talking about.
The problem with games like TLoU2, Assassin's Creed and RDR2 (and once upon a time Skyrim and the Witcher III) - games which rely on immersion because of AI behaviour is that they give you the *illusion* of sophisticated A.I., which is incredibly fragile (even though the devs want to convince you otherwise). As long as you do what you are supposed to do, the immersion is firm. It's only when you try to test the A.I.'s limits and routines that the immersion falls apart and you see the mountains of glitches, bugs and A.I. loopholes. And what was once a group of NPCs giving you the illusion of free-thinking artificial intelligence quickly shows itself for what it truly is: a brain dead program which responds to various 'triggers' (some set by the player, some by the environment itself) without being able to discern the context behind said triggers.
Like for example (I *think* I saw it actually happening in Gears 5), an NPC is walking towards you and you don't change your course. You both bump into each other and both stand still. The second you move in another direction, so does the NPC and it gives you the impression that (like in real life) both individuals acknowledged each other blocking the other's way and changed your walking path accordingly. But in same example, if you stay still and don't start a new walking route, the NPC stands still as well. Both you and the NPC locked in an eternal stare-down, never walking ever again, locked in a blinking contest. If your character doesn't move, the NPC doesn't move. Ever.
And at that moment, with that simple thing, all illusion of actual A.I. is thrown out of the window. Instead you see a hastily written code by a dev who didn't even bother to teach the NPC what to do and how to emulate real life when a human player has his avatar stand still in front of him. NPCs quoting the same lines day after day after day (it becomes kind of creepy to walk around the Whiterun marketplace after a while), walking at the exact same places in the exact same way every time of the day, two NPCs exchanging a couple of lines as you watch them nearby then stop talking and eternally look at each other in silence … things like that are immersion-breaking after a while.