Comment by camtarn
It sounds like a good idea at first, but would people really care after the first few conversations? After all, the conversations are unlikely to be related to any of the gameplay, and even though you could drip feed worldbuilding to the player, you only have so much source material. After a while I suspect it would become obvious which things are part of the official world source material, and which things are being made up on the fly without any consistency from conversation to conversation.
That said, though, I can definitely see a use for making the world feel more alive. Watch_Dogs: Legion put a lot of effort into having tons of voiced NPCs with interesting conversations and phone calls, but you could go even further by having an LLM generate text to be read by an AI TTS system.
I’d expect some combination of large models, reinforcement learning and NPUs to substantially improve non player characters.
These days, AMD has low power SoCs that include an NPU, and Nvidia seems to have just remembered that the consumer market exists. I’m sure next gen (after this one) consoles will do something with that hardware.