Back in the 90's there was a big emphasis on level design and environmental storytelling, especially in shooters.
Guys that created levels were famous for their creations, like
Richard "Levelord" Gray or Sandy Petersen and John Romero.
Games were even marketed with "levels created by".
Levelord singlehandedly raised 3D level design to new heights - his opus is literally the history of 3D games.
Whole thing faded away in the "big consolidation" of 2000's, in the same vein of other great traditions in video games that took step back to growing corporatization at that time.
On the first look it seems that cRPG's are lacking in this department, but that is only partially true.
Entrance sectors and surroundings of the city hubs are good examples of environmental storytelling in RPGs.
Sometimes walls being half breached in siege, outlaw and non-desirables camps outside of security ot town, some sort of decaying and rot around cursed or declining settlements... Even foreshadowing some factions or NPC's that you will find inside.
But, as soon you enter main city map, this usually disappears: the town has to be "vibrant" and everyone is so eager to tell you everything about the world.
This, combined with a tendency of authors to overexplain lore and settings (they put so much work in it), sometimes totally broke the games for me.
The worst offenders are the tutorial "zones" that interrupt you every half a minute with often non-essential information without your control.
I have no problem with even lowest form of environmental storytelling like road signs or road blocks, just as they leave me to play freely.
Good games will then use environmental storytelling in side quests and smaller locations, guild halls, locked cottages that you opened, sometimes connected with almost obligatory detective side quests.
Best examples of environmental storytelling in cRPGs are usually found in the dungeons.
Fallen adventurers, monsters and loot they leave behind, maybe a diary or unique item that adventurer thought will help him solve the dungeon.
State of fallen is usually great storytelling clue, grotesquely disfigured by strength of monsters in dungeon or full of poison darts (this is similar as mentiond rebreather marine in Quake).
Puzzles and traps can tell a story about dungeon, as they are usually put in front of important parts of dungeon.
So, when you trigger a trap, you are on right way!
I also quite like the "balconies" - elevated or secured parts of dungeon that enable you to get better feel of environment and watch and listen enemies.
It is best if they are hidden or only reachable with using of certain skills and gear, making them easy to miss.
They should offer "reward" in a way of decimating the ranks of enemies or making the surroundings more advantegeous in upcoming battle by pulling some convenient lever.
They are also great substitute for cut-scenes (another immersion breaking plague of cRPG's), but are often used to trigger them, sadly.
Environmental storytelling is one of the unique storytelling tools of the video games: make-or-break ingredient since beginning.
You just use the best creative tool that you have in medium - same with "show, don't tell" rule in filmmaking, "leave player to interact, don't tell or show" should be the first thought of video game developer.
I love these parts of cRPG's, when "narrator" shuts up and leaves you to explore the game.
and 
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