I guess as a continuation of this whole "giving identity to lots of characters" vibe that my brother and I have been writing about lately, I wanted to follow up on my last post. After thinking a bit, I realized that there is one more rather good way to make characters interesting, even without forcing the player to pay attention to a character through a difficult character recruitment phase. In fact, this method is pretty good for making both controllable characters and NPCs interesting. This method is seen in at least two games I am aware of: Radiata Stories and The Legend of Zelda: Majora's Mask, two games where every character is on a set schedule, wandering around acting out their daily lives.
In these two games, time passes hour by hour regardless of what the player does. As it does so, all of the characters wander around on their own paths. A single character may leave their house in the morning, go talk to friend, walk around town a bit after that, go to work in the afternoon, work all day, and then return home to sleep at night. At different times, such a character may say different things, offer different services, potentially trigger a story sequence, or simply lead the player to different places. This has the potential to give quite a bit of depth to a character by fleshing out the character's personality and quirks, allowing a character to belong to multiple different groups of people, and making the character seem more life-like and less like a static part of the scenery.
An important effect of giving every character a schedule is that it encourages the player to closely examine the game world and its characters. It becomes fun and interesting to go to different places at different times, hang around at one place all day to see what happens and who comes by, or just follow a person around all day and see what they do. Radiata Stories and Majora's Mask both reward such behavior, which makes the experience even more fun. It is impossible to complete the Kafei quest in Majora's Mask without exploring the game in this manner, and the complexity of that quest makes that particularly sub-plot and its characters memorable even for the Legend of Zelda series. In Radiata Stories, there are some hidden things you can only find like this, such as a character you can only recruit by following the leader of the Warrior Guild through the maze-like sewer as she goes on her daily trip to pay respect at a hidden shrine, or a brief moment in which an arrogant and aloof girl watches over her sick brother late at night.
Another good aspect of such a system is that it allows for the plot of the game to have more meaningful changes to the actions of generic characters and NPCs. In more traditional styles of game, NPCs may change where they are standing or what they are saying, but in this system NPCs may change their entire daily schedule based on a story event, which can highlight the importance of the story upon the setting and make all of the characters more complex. The changes in a region that you can trigger in Majora's Mask by completing side-quests or defeating a boss are a great example of this at work.
There are certainly some problems and limitations with such a system, though. As is shown by the examples I have listed, it works best in a limited, but detailed setting, usually built around a town that works as a hub for all of the player's activity, because it would be absurdly difficult to implement it in a wider setting, and it would be equally more difficult for the player to understand the cycles of a larger setting and number of characters. Also, it can lead to problems where the player as to spend an hour of play time just to complete a minor task he set out to do if he times his actions improperly. That said, I think the potential benefits of such a system far outweigh the potential drawbacks.