I don’t have time right now to write a full proper response, but for quests I would imagine starting out we would still use traditional random generation the bones of the quest, but use an LLM to create the narrative and NPC dialogs for it. Games like Shadows of Doubt already do a good job with randomly generated objectives, but there’s no motive for the crimes. Just taking the already existing gameplay and using LLM to generate a reason why the crime happened would help with the atmosphere a lot. Also, you can question suspects and sometimes solve the case by them telling you they saw [person] at [location] at [time], but I think an LLM could provide actual witness interrogation where you have to ask the right question, or try to catch them in a lie.

As far as the mechanics for LLMs to actually provide dialog, I expect to see some 3rd party AI startups work on it. Some kind of system where they have some base language packages that provide general knowledge and dialog abilities, and then a collection of smaller models/loras to specialize. Finally you would have behind the scenes prompting that tells the NPC who their character is, any character/quest specific knowledge they have, their disposition towards the player, etc. I don’t expect every game company to come up with this on their own, I suspect we’ll get a few individual companies offering a built solution for it starting out, before it eventually becomes built into the larger game engines.