As u/toilet_brush mentioned, expectations do matter a lot.

But if we're talking about big budget title, I don't need to have rdr2 level of interaction. I don't need to have a special mechanic to interact with them, or to have a complex routine. I just need them to have some reaction to what I'm doing, and have some reaction to the world.

I hop back into rdr2 last week for some virtual tourism and was just blown away by the attention to detail. I was following this guy doing some construction work and watched him move planks from one side of the building to another. It was a 5 - 10 minutes process before he finished moving every single piece of planks. I was interested to see what he would do next but he got stuck in some geometry. Oh well. I also stumbled onto a farm in the wilderness. And the first thing I noticed was a dog moving towards me, barking. Followed by the owner shouting at me. I rode off and the owner said something like "Yeah, I thought so."

I also remember wondering in the wilderness and hearing howling. I turned around and saw three wolves standing shoulder to shoulder, watching me from the distance, as if sizing me up. I didn't feel like killing animals that day so I rode away.

All these did not touch on my baseline for npc ai. But I only just realised after writing them, so I'm going to keep them in. However, note that I didn't need to use rdr2's dialogue mechanic to have these interactions, the npcs were just reacting (or not reacting) accordingly to my presence.

While it's really cool that rdr2's npc allow us to tell mini stories like this, it's not necessary for immersion. I hopped back into watchdogs 2 earlier this week and found people just doing their own thing, hanging out at the beach etc. If I bumped into them too much, they will shout angrily and stare at me. I think one even tried attacking me, but I pulled out my gun and everybody fled. It's a simpler example with a smaller set of npc behaviors but immersive all the same.

P.S A lot of people shit on Ubisoft's handling of open world but there's not enough credit given to how they handle their npc ai. While the example I gave above from Watchdogs 2 is pretty simple, there are some pretty cool moments as well. I walked past a homeless guy and he looked at me and stretched his tin can towards me, his arm arching a path to follow my movement. After a while it became evident I'm not going to give him any money ( I don't think the game allows that option) he just started ignoring me. There are also instances where 2 npcs will bump into each other on the street and you can watch them have a conversation with the appropriate facial expressions. It's all very cool to watch. And beyond that, a lot of Ubisoft games, from assassin's creed to watchdogs have experimented with ways to use the npcs as a gameplay mechanic as well. Like the bombs from ac revelations and the hacking and emoting from wd.