I think any NPC with dialogue important to a goal (a quest, a tutorial, etc) is going to be hard to use generative AI for. It not only needs to be coherent with the story, but it needs to correctly include certain ideas. I.e. if the NPC gives a quest to go find some item at some location, it needs to say what the item is and where it is.
I think we're currently stuck in a local minima where AI isn't up to the task of making a coherent player-interactable world, but an incoherent or fragmented and non-interactable world isn't impressive enough (like No Man's Sky).
I think we're currently stuck in a local minima where AI isn't up to the task of making a coherent player-interactable world, but an incoherent or fragmented and non-interactable world isn't impressive enough (like No Man's Sky).