So I was reminiscing about the days slaughtering darkspawn alongside Sten and Alister. Dragon Age Origins was released back in (I think) 2009 and yet it still holds some of my fondest memories of gaming. The reason: the NPC's.
This game much like Pillars of Eternity is centered around a believable world and having it populated by a variety of characters, akin to real life. As a writer myself, characterisation isn't an easy thing to do. On the one hand, you have the job of making the NPCs that the main character is interacting with as relatable and realistic as possible, on the other you also can't make them too complicated for people to keep up with if there are new characters all the time.
The bit that requires (in my humble opinion) the greatest amount of thought is the judgement call on how fleshed out and how much writing can be assigned to any given person. Is this character going to be doing anything even slightly important (vendor level or above really)? If yes then a backstory is helpful (even if it isn't added in game). The layer that the player (or reader) sees is where they are now and how they react to them at that moment of interaction, but the reason that this particular character is, for example, hateful towards the PC doesn't have to be revealed in game specifically but the writer is aware of it all the time throughout the writing process. This helps get into the mindset of that NPC and forms their language, how they specifically structure their sentences and their facial expressions (again, not seen by the player necessarily but kept in mind).
This topic is actually huge and I was planning to and could write more but I doubt anyone is interested honestly.