I would read it as saying there will be a lot more in the way of character development and character interaction and quests related to this. I see romance as a part of this, but only a part.
To me the experience would be that much more immersive if it even in some small way mimics 'real life'. Yeah, there is romance, but there should also be greed, boredom, horrid fashion sense, loud obnoxious ranters on mass transit.... One of the minor niggles I had with Kotor was that I never really felt like I was part of a group of people. There was minimal use of dynamics between the group outside of the specific quests and the romance options. Even the romance I only ever felt like it was me and the romantic interest - no real comments or jealousy or anything from any of the other characters. I for one would love to see more development in this area and I hope this is what they are intending and doing.
