This helps when you have to do a quest where you have to defend another character in the world.. You already care by default because protecting them is required to finish the mission but thats too cold. A fleshed out real world will help you draw closer to that character and develop a relationship with them. That way when youre protecting them it means that much more to you because its like your own friend is in trouble.
Realism isnt just about the characters themselves. Its also about how the game world works. In every sandbox game there are hundreds of glitches. In every Bethesda game you have the floating items glitch. When Skyrim was released people spent a lot of time talking about how the horse could go up mountains at a 90 degree angle. Of course the game is filled with mountains so horses have to be able to climb mountains, but still people would complain about it. As I mentioned before I like my games to have unrealistic aspects to it. Especially if the game in question is a fantasy game because Im here to play games and just relax for a while. Having a completely realistic game would just feel weird.
Contrast this to a game like Fable where everything in the entire world is catered around your character. No one else in the game but your character matters. There are hundreds of characters in the game. Towns have large populations but they dont matter. They all have names likes and interests but they dont matter more than numbers do.
This can be especially nerve racking on your first play-through of any game. In games like Skyrim important characters cant die, but if youve never played the game before you dont know that. The characters life can be especially important to you.
The Elder Scrolls series was built on immersion. Everything in an elder scrolls game is tediously fleshed out. That ruins? An entire team built that. That book on the table? Yes, you can read it and it actually is a story. A short story but a story nonetheless. Everything in those games is old and has a story behind it. An Elder Scrolls game has an entire completed world. Take Skyrim for example each city has its own little world with NPCs just acting out their daily lives and we can observe them and take part in them.
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