How far away are we from games with fully AI-driven, emergent worlds and stories?

How realistic is the idea of a game where essentially nothing about the story is predetermined, and instead thousands of AI controlled characters exist in a persistent world, acting independently and creating an emergent story around the player? For example, imagine a Minecraft server with thousands of simulated people. You could decide to found an empire, These same simulated people might join you, factions could form, wars and betrayals could happen, and civilizations could independently develop thousands of blocks away, waiting to be discovered (or not) by the player. Characters could remember something you did 50 hours ago, tell others about it, and potentially cause a chain of events that affects you much later. Basically, the history / story would formulate itself in real time. How realistic, or not, is this? Obviously it's a very simplified version, and there would be nuances like not ACTUALLY having thousands of simulated players at once, but rather background process' like economic / world simulations that only actually come into existence under certain circumstances. But the overall premise, is this something that could ever actually exist? And if so, when?