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I think this exact sentiment is explained over and over why people leave the Culture in the books. And why they don't actually have to -- full freedom to do literally anything is given to you as an individual of the Culture. There's effectively no difference in what freedom of personal choice you're afforded whether you're a part of the Culture or whether you leave it.

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I've seen this sentiment summarized as humans becoming NPCs in their own story.

That doesn't seem right to me. The closest I could come is seeing humanity, or perhaps the human species, becoming NPCs in their own story.

But I think individual humans have always been narratively secondary in the story of humanity.

And I think that's fine, because "story" is a fiction we use to manage a big world in the 3 pounds of headmeat we all get. Reducing all of humanity to a single story is really the dehumanizing part, whether it involves AIs or not. We all have our own stories.

Isn't that currently the case except for a very small number of people?

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