Oh people tried. It's just that the effort required to develop these kinds of game worlds relative to the amount of fun gained is often very poor. That's not to say it's nonexistant, it's just that its easy to say something like "I want NPCs to go about their lives in the world convincingly and be affected by player actions", but it's quite another thing to program such a system, pay voice actors, hire writers to write thousands of possible permutations of dialog, with high chances of it ending up having little concequence for the players except as an idle curiosity while they wait for something else.