attempt to simulate an actual living world no longer seems to be any sort of priority for devs though
It's probably because a living world is not really relevant to story-centric experiences. It would be a lot of effort for a smaller detail.
I think the only kind of game where going that far would make sense would be games that mostly live from emergent gameplay, something like RimWorld or Dwarf Fortress. It would probably also work nicely for Cataclysm.
Basically, the less "scripted" the gameplay, the more a simulation of other parties would make sense.
Still, the rest could at least have reasonable level scaling where it does make sense, instead of just bluntly scaling everything (in which case scaling nothing is just better).