I think its a matter of time when we will have photorealistic playable computer games generated by these engines.
So if you're the first to approach the Opera House, it would ask the engine for 3D models of the area, and it would query its image database, see the fancy opera house, and generate its own interpretation.. if there's no data (e.g. a landscape in the middle of Africa), it'd use the satellite image plus typical fauna of the region..
It could work, but they would have to both write unique prompts for each NPC (instead of "generate me 100 NPC personality prompts") and limit the possible interactions and behaviours.
But, emergent / generative behaviour would be interesting to a point. There's plenty of roguelikes / roguelites where this could work in, given their generative behaviours.