> Maybe a simplified model will run to represent time passing while we are away, in games where that sort of thing matters

More primitive, but this is technically how AI in Bethesda games work, has this background simulation for NPCs going on when out of sight. Think it's mainly focused on movement patterns though.

Dwarf fortress as well has it's world simulation setup such that the current tile is higher precision than the rest of the world. In fact I think plugging the output of this simulation would work perfectly as context for an LLM (or Embedding?) depending on what you wanted to accomplish...