Elder Scrolls IV: Oblivion Preview
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All up, there are some 1000 unique NPCs scattered across Cyrodiil, and a total of 50 hours of recorded speech lip-synced in real-time with facial animations for emotions to breathe life into all of them. The game tracks how every one of them feels about you. You can make friends, or enemies, wherever you go. As with Morrowind, the more 'good' quests you do the higher your fame will become. Committing crimes will generate the opposite. Factions in the world respond to this, so if you're enough of a badarse you may even get an invitation to join the Dark Brotherhood or Thieves Guild.
The bread and butter for RPGs is questing, and the Radiant AI allows the player to be creative in how a quest is completed in Oblivion. For example, if you have to steal a rare gem from a shop owner you could walk right in, whack him over the head, and take it. You could wait until he leaves, and steal it. Or if you find out that he keeps it with him at all times, you could follow him to a secluded spot and then pants him, out of the sight of guards. It comes back to freedom and immersion. In the words of Todd Howard, lead designer on Oblivion, it's all about options.