The reason it's not a standard is that it's much more costly. Having a game that plays itself, in addition to the player playing it, is extremely resource intensive. Not only that but it requires much more development work, on AI, on optimization, on assets, on design, etc.
Now, if it is better (and it definitely is), that could be worth it, but at equal cost it means the game will have to compete with similar games offering a much more refined experience. The simulation completely changes the game, but from an outside perspective it will just look like a lesser game. Only people that really get into it will see the difference. There are also new challenges, like chaos and complexity. Because the player has much more freedom, you have much less control over his experience. That lack of control over the player experience is why players end up reducing a potentially rich and dynamic open world to a boring fishing/walking sim. That's why they have trouble dealing with the complexity of the game, or its difficulty.
However, while it's not a standard, it's slowly becoming one. Open world games are becoming the norm, non linear games are becoming the norm, immersion and freedom are considered more and more attractive. Eventually, most rpgs will adopt that model, we just have to wait until technology makes it more cost-efficient.
And learn from games that are already doing it. Either because they have huge amounts of resources and can support such systems (mmo), or because their nature makes such dynamic systems very cheap to simulate (turn-based, 2D).
Mmorpgs are a good example, because they have the resources to do that kind of thing. GW2 for example has dynamic events, and while those events are limited by the multiplayer nature of the game, they achieve what you describe pretty well. On the other end of the spectrum, Rain World has a completely dynamic ecosystem. It's a truly unique indie platformer and it's both excellent and terrible at times. A great example of how even a very simple dynamic world can generate huge design problems. For every beautiful and unique outcome of the dynamic system, you have a completely chaotic and frustrating one. It's both the reason to love and the reason to hate the game. And the game could be absolutely great if only it supported its dynamic design.
A dynamic world means that you need a dynamically controlled player experience, otherwise it's just chaos. Dynamic difficulty and storytelling will become the norm as well, because without them those kind of games simply cannot work. Designers will have to find new tricks to control what players do in games where they can do virtually anything they want.