Dragon Age: Origins definitely did a good job making it feel like a large, heavily populated battle within the constraints of the game engine. The final battle of New Vegas always bothered me because there were a total of probably 5 to 8 NPCs in this allegedly "epic battle of Hoover Dam," But the developers still did a bang up job working with it and making it play out well despite that constraint.You don't have to. All you have to do, is actually create the narrative. The player has not to take an active part in everything. For example, Dragon Age 1, as many issues as the game has, but the presentation is pretty good. The first few missions of the game start with a war going on, where thousands of troops are fighting each other right under you. And the game has a few of those situations where you see troops marching in to battle, or a siege going on while you sneak in to the town or what ever.
If you can't bend the engine to your narrative, than you have to bend the narrative to your engine. It can work. But it takes effort. Good writers. Good designers.
Gamebryo's most obvious flaw in my experience playing their games has been the sheer lack of NPCs in scenes which really call for a large population.
Same thing with "cities" consisting of around 10 people with a few houses and a place for the Jarl.
Part of the problem is that Bethesda as company insists on making everything open world, and as someone pointed out, the player has to be able to take action in everything. Like really everything. If people have routines to get to the toilet - why is there never a toilet in any of the Bethesda games anyway? The player has to be able to take action in that too. I never understood this approach anyway, because it seems immersion is very important to Bethesda, but their worlds never felt immersive to me.
I think a lot more could be achieved if you actually try something that is more similar to the Witcher 2 or no clue, Gothic 2 or something similar. With parts of the game that are open world, ready for exploration, while there are also parts that are closed of and only accessible trough the main quest eventually. They did that in Skyrim, a couple of times. Like the Thalmor Embassy, which I think was actually a better part of the Skyrim game, I even liked it! Why? Because it gave me finally the oportunity to actually role play a little. Even though, it is nothing like what you expect in a real role playing game, it was OK for Skyrims standards.
But of course, as long as their intention and goal is to design theme parks with the main focus on whack-a-mole gameplay, role playing elements will be always sacrificed for that. Doesn't matter if we're talking about Elder Scrolls or Fallout at this point ...