The need is then to have a database of everything (done!), build a generator for quest steps, and then place the quest requirements back in the game. This sorry of thing has been possible since, oh, I dunno, 1997: Daggerfall.

The whole trick is keeping it from getting too same-y/boring. Current games handle that by leaning on human writing and character modeling for even the minor quests, though the quality standards on the side quests tend to be low, and they get boring anyway. (Which is why I've still never finished Witcher 3...) Adding AI writing in the mix for side quests is a no brainer.