Is AI gaming finally moving past gimmicks or still early hype?

Just saw this video of an AI companion game where you talk to the character directly to progress the story. Highly worth a watch, the creator is hilarious and I couldn't stop laughing at how he messes with the AI NPC.

I tried the game myself on Steam, and it feels like a modern version of an 80's text adventure. While the tech is impressive and the AI character feels more realistic than most chatbots I've used, I'm still struggling if it feels like meaningful gameplay or just a fun experiment. That is, while it's essential to the core design of this AI roleplaying game, I wonder if it could have deeper consequences on all games in general, or even if they utilized it to the full potential in this game.

It's bringing up a core question for me, especially with rumors that GTA 6 will have AI NPCs, and all the procedurally generated video games we've been seeing that are cooler to see than they are to play: what would it take for AI to feel essential to game design, not just a gimmick?