To elucidate a bit more:
An RPG is a story, simply put.
You know those stories Gary made in the Greyhawk series?
Those were based off of campaigns of his in the early AD&D days.
But an RPG is more than that, when you place a free-thinking individual into the story, much less a game as well. Here's the most important aspects of an RPG, and why they are done the way they are. HOWEVER, this is not in order, but more along a list of what makes up an RPG/ideal CRPG. NPCs here are referring to non-party characters.
1. The story.
2. The character.
3. The setting (including NPCs)
4. Interaction between the character and the story.
5. Interaction between the character and other possible player characters.
6. Interaction between the NPCs and the story.
7. Interaction between the NPCs and the character.
8. Interaction between the NPCs and other NPCs.
9. Interaction of the setting and the story.
10. Interaction between the player and the setting.
11. Interaction between the NPCs and the setting.
12. Variety.
That's FAR from everything that makes up a good RPG. Let me further these points so it's easily understandable.
1: A story is not an excuse for the action, combat, or general repetitive combat. It should be first and foremost at the player's mind, and never set to the back burner.
2: The character NEVER relies on the reflexes and/or abilities of the player. It's the character the player is playing, thus you use the abilities of the character. True, as a player you might get used to the game and be better at playing it, yet as a player you still have to rely on the stats of the character.
3: Post-apocalyptic? Fantasy? Modern? What's the setting and theme?
4: What is the protagonist's (main character's) purpose in the story? They are there to just go through endless quests, or are they there to serve a mission of great importance? In a good RPG, what the player does is reflected back in the story - hence, nonlinearity. The character indeed does have an impact upon the story, but no good RPG would be without another great detail - how does the story affect the character?
5: Are they a group of bland characters, or do they each have a personality of their own? If each character is played by a person, then it's possible, however doubtful it is to find those good at RPing a character. If they are 'played' by the computer, then do they convey a good sense of personality? A good example would be Baldur's Gate 2, or Planescape: Torment.
6: This only points out what purpose the NPCs have on the story. Are they there to tell you the sword is behind the waterfall over and over, or will they actually match the setting and act in it? A good RPG will have the latter.
7: Is the player character idolized or shunned? It depends on his actions, and the NPC reactions to his actions. This is the dynamic part of an RPG that is indeed hard to accomplish in a CRPG.
8: How do the NPCs 'mesh' into an environment or a 'community'? Are they independent little robots, or are they apparently free-thinking individuals of their own? Do events in the story have them interact with one another, and bring the player in to interact with that aspect of an RPG?
9: This is a very big point. And where a lot of RPG games fail. It seems simple, yet so many fail. You have to 'capture' the feeling of a game through the setting to make the story believable and enjoyable; to give the RPG depth.
10: What does the player do to change the setting? This ties hand in hand with number 7, and creates an environment for the player to explore and mold into how they play.
11: What do the events that the NPCs do that tie into the setting? This ties into the story and everything else.
12: No two games played in a particular CRPG should be the same. Each time should be a near or totally unique experience. Nonlinearity is the epitome of this trait of RPG games.
All of this BIS has done, and has repeatedly shown themselves more than capable of achieving. It's not easy, but it's fun to do. Wasteland was a beginning, Fallout was a shining example. Planescape: Torment was a brilliant introduction to the CRPG genre, and it's held to be the best CRPG to date by many.