There is no NPC type in Untold Lore. The world's people are characters — the same kind you play, with the same bodies, pockets, vitals and skills. Residents keep standing in the world when nobody is driving them, and what happens to them is permanent: a resident who dies stays dead.
Talking
You can talk to anyone — resident or player. Who they are decides what they say: people carry personality traits, and a greeting is drawn from lines those traits own. Speech appears over the speaker's head for anyone close enough to hear, full-strength to about ten metres and gone by fifteen, and residents mutter to themselves as they go about their business.
Belonging and asking
Designed and not yet in the game: conversation will grow topics — ask a person who they belong to and you learn of their organizations; ask about one you have heard of and their character colours the answer; ask a member to join and you are in. What a character has heard of is their own — a second character of yours starts knowing nothing.
Working
Residents will work task lists — stand at a post, keep a larder stocked, craft when supplies run low — unsupervised, with the same rules your own body follows on autopilot.