Like others say, Ultima 7 is a peak in this area. Even at the time, it felt a decline to go then to Baldur's Gate which had night and day cycles but little variation in what npcs were doing.
Trails of the Sky and then Trails of Cold Steel games are often raised as more recent great "world builders" where npcs do their own thing. One of the mechanics used to simplify the game development process though is to "time lock" the player in particular segments of the day or night and season dependent on progression of certain elements the game being progressed, which is not to everyone's taste. The quantity (and quality) of the writing for those npcs and the progression through activity schedules often independent of what the player characters are involved in is however very impressive; farmers farm (in the appropriate season) then eat dinner in the evening, children play till they get bored then flop around or throw tantrums and refuse to go to sleep, shops open and close depending on hours, people leave town for bureaucratic meetings elsewhere etc.
The important thing here is that all of this is carefully scripted (as in writers have considered and determined what is going on) rather than being the derivation of some form of simulated agent-based activity schedule. The reality is that the latter is very hard to make plausible in any level of detail that will sufficiently appeal as being reflective of real life and not just a multiplier of Mr Homoeconomicus. It is far better (at this point in time) to still have writers plan, write and capture those specific notions of what people do mundanely, but this is obviously less efficient from a game development perspective.
Trails of the Sky and then Trails of Cold Steel games are often raised as more recent great "world builders" where npcs do their own thing. One of the mechanics used to simplify the game development process though is to "time lock" the player in particular segments of the day or night and season dependent on progression of certain elements the game being progressed, which is not to everyone's taste. The quantity (and quality) of the writing for those npcs and the progression through activity schedules often independent of what the player characters are involved in is however very impressive; farmers farm (in the appropriate season) then eat dinner in the evening, children play till they get bored then flop around or throw tantrums and refuse to go to sleep, shops open and close depending on hours, people leave town for bureaucratic meetings elsewhere etc.
The important thing here is that all of this is carefully scripted (as in writers have considered and determined what is going on) rather than being the derivation of some form of simulated agent-based activity schedule. The reality is that the latter is very hard to make plausible in any level of detail that will sufficiently appeal as being reflective of real life and not just a multiplier of Mr Homoeconomicus. It is far better (at this point in time) to still have writers plan, write and capture those specific notions of what people do mundanely, but this is obviously less efficient from a game development perspective.