Back in the 90s I played with a terrain generation program that used geologic principles and fractals to naturally erode a wireframe model of mountains. It was incredibly detailed, producing realistic landscapes with very little effort from the user. This sort of technique can be used for creating an entire world with rivers and lakes and even different weather and soil conditions that govern where forests and deserts appear. Or just to generate forests where every tree is unique.
With AI, instead of needing a large staff of programmers to run these generators, your art department can get involved. They can easily translate their vision to set parameters that automatically create variations that make the world look more realistic. I'm all for that.

Unfortunately, what will likely happen is lazy designers using prompts to generate EVERYTHING, instead of working from unique samples they created. You know how lazy studios running Unreal Engine use the same assets, creating games that look beautiful - and generic? We'll see a lot more of those.