So, where do all the NPC's live?

[MorbolvampireQueen6]

And single-player RPGs can have the exact same issue, where towns tend to consist of [local plot-relevant building], an inn, a shop and two houses.

Your not fully playing single player rpgs then because normally there is 1 house per family of npcs outside destroyed towns and warzones... in fact if you believe that youv never complete a full treasure list in single player rpgs