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Square Enix’s president says it will be ‘aggressive in applying’ AI
(www.videogameschronicle.com)
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Side quests on the fly? That already exists. Oblivion, Fallout 3, Skyrim, and Fallout 4 had radiant AI quests. I would much rather have a game that was hand made by humans where the quests that exist are the quests that were designed. Or, in the case of radiant AI, heavily guardrailed randomness.
The only radiant quests I can think of in Oblivion were after you had finished the Dark Brotherhood or Arena quest lines. I don't remember any other random quests from that one.