I think it has its place.
For 'background filler' I think it makes a lot of sense; stuff which you don't need to care about, but whose absence can make something feel less real.
To me, this takes the place / augments procedural generation stuff. NPC crowds in which none of the participants are needed for the plot, but in which you can have unique clothing / appearance / lines is not "needed" for a game, but can flesh it out when done thoughtfully.
Recall the lambasting Cyberpunk 2077 got for its NPCs that cycled through a seemingly very limited number of appearances, to the point that you'd see clones right next to each other. This would solve that sort of problem, for example.
To me, this takes the place / augments procedural generation stuff. NPC crowds in which none of the participants are needed for the plot, but in which you can have unique clothing / appearance / lines is not "needed" for a game, but can flesh it out when done thoughtfully.
Recall the lambasting Cyberpunk 2077 got for its NPCs that cycled through a seemingly very limited number of appearances, to the point that you'd see clones right next to each other. This would solve that sort of problem, for example.