I mean they keep a schedule. Like the game has a day and night cycle right? So you will always have NPC's attending their shops (your regular shops) during the day, and sleeping at night, and shops that are only open during the night (eg blackmarkets) and are attended by more "dark" NPC's. Should you choose to embark on a quest that requires 7 players, whoever is available (depending on content,) player or NPC will join the party. If the NPC's die during the quest they are subject to the same rules players are. So if you kick them from the party while they are knocked out, they will revive back in town and "remember you for that" and the next time you look for a party, that NPC will not join you again until you make it up to them. Or you could just go about an never try to fix it, there are plenty of other players and NPC's.
If there is an especially good NPC (let's say for the sake of argument, you wanted to take the "King" out on an adventure) they will likely not join players that aren't popular with NPC's. But should you get the King in your party, the King will want the quest to succeed at all costs, so they may "rent" you all the gear you need for the quest for free as long as you're on that quest. Shopkeep NPC's may do the same. Adventurer NPC's can only rent gear they own. Smithy-type NPC's may craft or repair gear just go out on such quests. And so forth.
As for downsides...
Most NPC's will likely not join you on quests that are anti-alignment. You need to seek players/NPC's of the same quest alignment. If you're in "Herotown" and you want to start the quest "Who wants to be A Villainare?" , chances are nobody will join your party until you wander outside Herotown, or find the shady backalley at night. So most of the time un-aligned quests will find party members in the immediate vicinity that will be willing to do that quest. NPC's shopkeepers are always interested in joining because they can get "Free loot", and taking a shopkeeper NPC with you will make that shopkeeper NPC unavailable to the rest of the world until they are dismissed from the party or the quest ends. Most NPC's will keep their own narrative, and failing certain quests will make them unwilling to join players again if that quest is not yet completed.
Some NPC's will have "blank" slate narratives to begin with, and will join anyones party, but they are basically "NPC-casual" and can only learn how to fight other monsters by copying what players do. Where as specific NPC types (Eg Deity, Celebrity, Shopkeeps, Light Adventurer, Dark Adventurer) will have a certain style and alignment in order for them to join, and some are better than others for certain quests. Celebrity NPC's would include socialites and royalty, and you'd need to be "on their list" just to speak to them. They might be awful combat partners, but they have high charisma, so it may be possible to solve a quest peacefully that would otherwise require bloodshed. A Deity NPC (think more along the lines of the primals in FFXIV) would require sacrifices of time or inventory to their shrine or temple, so they would be very-powerful but also very expensive in game resources to summon.
Like just to touch back on the "dating game" concepts. In a MMORPG context, the only game that did this was Mabinogi, but every time your character was "reborn" the NPC's all forget, so there wasn't really much point to it. There were certain quests and gear available if you made the NPC's like you enough, but none of them joined you in any quest.
The idea here isn't to have 3-4 NPC's that follow you around like a lost puppy the minute you login, but rather the NPC's will keep a popularity table, and should you be on their list when you open a party, they will join you automatically if you don't invite them first. If a quest requires 3 healers, then only NPC's that have a healer AI would join.
If shopkeepers are absent due to being out on a quest, or sleeping, other shopkeepers will take their place if their shop is regularly busy.
As I said, it would require a great deal of foresight to plan a smarter NPC-Player interaction system, and it requires the world actually functioning like a world with needs, not just having NPC's that give out their one quest while being part of the map.



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