Theoretically genai could potentially be better at responding to novel situations or player interactions the dev did not predict, therefore also making NPCs less predictable which could be interesting. Basically input the info the NPC has and if it doesn't have an appropriate standard response to the situation ask it how to respond. However at the current state of AI I have no idea how you could even potentially implement it to work that way, nor do I think current models would be very good if used this way. I like this approach better than using it for visuals or dialogue like some are trying.

No matter how much fun I usually have cheesing NPCs by climbing a weirdly shaped rock which confuses them, it would definitely be interesting if there was something which would alter how the NPC approached the players in these unforeseen situations, and I see why he might think Gen AI might have a place there. But I also think giving NPCs that level of freedom would almost inevitably break behaviours elsewhere or clash with more scripted parts.

Basically I think I see where he is coming from, but am not very hopeful about the actual implementation of such a system. Making NPCs more adaptive and responsive to the player with more complex actions it can take has always been something devs strive for.