Right,
It's essentially a stepping stone for game worlds (open worlds games in particular) to be inhabited by organic AI characters and background systems (weather, economy, seasons etc) that runs and alters itself regardless of the player. When you play a MMORPG, you get this experience. The game keeps going on, even if you are not participating. The day/night cycle and the economy continues.
But the NPCs are dead, stale and follow simple scripted behavior. The player cannot permanently kill the questgiver, burn down the capital city and enslave its populous. The NPCs are not created in a way that allows them to respond, duplicate, and do actions based on altering states. That is because games are still built with a static ethos in mind.
There is no forefront of gaming that has made as little progress as AI. AI is complicated because its not about making AI that is merely better than human players. In fact, more times than not, we want AI that performs and reacts like a human would. We all know the feeling of playing a racing game where the AI is fine tuned to be better than the player, but this behavior is immersion breaking and not fun. You want an AI that is as good as a really really good human player, with all the unpredictable spontaneity that it requires.
As technology and game design has progressed we have seen a massive backtrack in freedom in our games. What many Games journalists don't understand is that modern games are often more limited than in the past. Skyrim might be a much more polished and tight experience than Morrowind, but Morrowind was extremely open and allowed you to destroy your own playthrough if you killed the wrong NPC or specced your character in a bad way. MMORPGs like Ultima Online had features and gameplay systems that make games look like WoW, seem like fucking farmville.
We should be building games that puts emphasis on interaction in any way the player wants. When you really deconstruct games like GTA, Red Dead and Assassins Creed, they are fairly limited and made the same way. Despite various novelty context sensitive induced features that pop up in every installment, its more of the same. In this game you can control gang territory, in this one you send your assassins out on missions, in this one you can do heists, in this one you can have bounties on you, in this one you can attack forts. It's all the same gameplay loop with a few unique gameplay systems sprinkled in to break the tedium, but they have never addressed the AI.
RDR2 works for all intent and purposes like GTA 3 when it comes to AI. And buildings. You destroy the entire world, and kill everyone and regrow the world with different people, or make a war. The games have constant barriers that limit what you can do. The interaction in these sandbox open world games have tons of structures that inhibit player freedom. And in games like where you can do more like Just Cause or Fallout, it still just feels empty as there is a void of realistic NPCs (old people, animals, kids).