Even more important than permanent character death, emergent, or "organic" story and game-play progression, is a key ingredient of classic-style role-playing games. Over the years, this has become something that has been lost to a great extent in gaming, both on the table and computer. Why do we continue, year after year, to accept interactive entertainment to become less and less interactive like novels or movies?
Because of this barrier to entry, I unfortunately never had a chance to witness some of the never-done-since mechanics in this game. Fallout (and from what I'm hearing about its sequel) is one of the most open-ended sandbox CRPGs ever made. From start to finish, there are almost zero barriers, as far as tasks that can be completed in which order, and how they can be carried out. Now, if it only ended there, I could cite several other games that could also claim that crown like Morrowind, Gothic II, Ultima 7 and a few others from the 80s (incredible games in their own right).
But Fallout takes it a step further. Not only does this game provide a highly deep and open world to experience, but almost every action taken has a very tangible effect on everything else. One of the early examples (I say "early" only if you decide to go where most do at first) of this takes place during a meeting with an important, and powerful NPC who leads a town. In 99% of video games, such a figure would be either A) impossible to kill (has some sort of invincibility flag, or is uber strong), or B) scripted to be killed, or C) would summon some sort of unbeatable guard/wizard trope to take you down the instant that you tried to kill him. I would shocked to find out that none of these scenarios was the case.
After just a few moments upon meeting him the first time, an assassin enters the room and blows him away. Dead. Yes, I had a choice to either kill the assassin or help him, but I decided to play neutral (you know, expecting the "story" to play out artificially like other games). But, here's the real kicker: the assassin doesn't always win. The battle's outcome is 100% natural, with no scripted flags to indicate invincibility or anything like that. Either party can die. When I saw this the first time, I was shocked. Here's an NPC with his own 3D rendered video animation conversation sequence, he is entangled in various political quest-lines, and sells some of the most powerful equipment in the early game (as far as I've seen thus far). And the game, not me, the game decides to kill him.
So because of his death, the entire political balance in the town is turned upside down. Other factions now have a chance to rise to the top, closing several doors, but leading your character through new ones. How many other games do this? Yes, you can murder Caius Cosades in Morrowind, but all that does is hamper his quest-line, it changes nothing other than that. Check for similar situations in Baldur's Gate.
What I've witnessed here was an emergent story, one that happened directly because of my action (or inaction). I'm just in the early part of this game, but I see evidence of this in other places. If you're rude to someone, word quickly gets around town that you're a jerk and vice-versa, if you show a little kindness, you'll find everyone else reacting positively - prices will be cheaper and quests will open while others will close. Dialogue plays out dramatically different depending on such factors, as well as your character's intelligence and charisma.
Stories in games and other forms of media today have come to mean things that turn out the way the author wants. It's a story that he designed to happen a certain way and we're supposed to enjoy it. Such stories can be entertaining and hold our interest for a time, but to be impacting upon our being, they must relate somehow to our own personal lives directly. When I was about 14, I had such an experience the first time my best friend and I played Final Fantasy II on the Super NES. I found a lot to relate to with the characters and their struggles and my own life at the time, entering puberty and struggling as a young teenager. I'll never forget the moment that the grown-up, Rydia shows up, once thought dead or lost, just in time to save the party during an important battle in the later part of the game. That game had a very cathartic experience for me, because I found a strong relationship between the story and my own life.
If you don't have that connection to one's personal life in a story, your story is far less impacting. At that point, it is simply a passing fancy, to be enjoyed with a bowl of popcorn and then forgotten. So how does my experience with Fallout and other games embracing emergent story relate to this? Because games like this tell stories through the player and his actions, a way to almost always guarantee that you create such impacting moments. Such stories have nothing to do with "a good ending" or "good acting" or "good writing", they can often be the most boring events to third-parties, but they are wholly engaging to the person experiencing because it involved their own personal life.