What role do you see fear playing in NPCs via video games? Outside of the occasional "scream" or "run away" I can't think of a time where I've seen fear utilized deeply via gaming NPCs
The key distinction being that the purpose of knowing their wants/fears is to know how they should respond as unforeseen events unfold. Real RPGs have unforeseen events. Video games have branching, but highly deterministic, events - therefore, the "NPC" just needs a set of scripts that cover those branches. You don't need to predict anything. They don't need to be characters in the way that RPG characters are characters; they need to be characters the way that fiction characters are characters.
The old sharecropping farmer may fear his landlord squeezing his finances in the fall.
The greedy merchant may fear that her husband is pissing away too much money on drink.
The cobbler's apprentice may fear his boss, because his boss is a huge, sometimes violent asshole.
These fears can add background flavour through worldbuilding, that make these characters memorable. Nobody cares about, or remembers generic merchant #2 in Bumtown, Nowhere, but they may remember if their first introduction to her is walking in to a family fight about liquor.
Even if the players never explicitly discover that fear, this grounds your design of the characters into something more interesting than "He's a farmer, she's a merchant, he's an apprentice."
They would if Bumtown were in the first circle of hell, and she was the only one selling gate-back-to-the-prime tickets.
Its about creating deep, relatable (or, at least: understandable) characters, that make the world feel more alive and not just a dull response dispenser.
When the mayor of a town has been killed 500 times maybe the townspeople should be deeply xenophobic. Maybe the shops stop selling weapons, etc.
Pardon the tangent, but this was particularly blatant in World of Warcraft. Because of the quests, you basically spend half your time committing genocide (wiping out some species or group). For some quest lines you have to murder your way into a place and then murder your way out of it. The irony of this is that the quests turn rogues into the least murderous class in the game, by far. They are the only ones that can reliably sneak in and out instead of murdering bystanders. This is disturbingly backward.
The other irony is that many of the main storylines are about preventing genocide. If a genocidal maniac goes around killing all the other genocidal maniacs, is it because they are good or because they are eliminating the competition?