@niklinna
The advantage of being able to go away and think up characters is really that you have the time and space to think and make decisions about them. So I can decide I want a crimelord and I can think about his backstory and who he is and what he values. Then in play I'm thinking about what they'll do 'in character' as it were. Now that's also true of very briefly drawn characters I've had to invent on the spot and for some games that's fine. I find for Apocalypse World and Sorcerer I want more richly detailed characters that I can use to express myself.
As that relates to creating the backstory situation. Well the characters I create want stuff and the situation is really just the moment when wanting stuff matters. So I need to be able to detail the crime boss and also that he wants the artefact art from the thief.
@RenleyRenfield
I was talking to a friend about this today and I ended up doubling down on my position. When I've been prepping I've still been thinking about the player characters too much and I think it's been effecting how much of my expression I've been putting into the NPC's.
The way it works (or doesn't) is that driven characters will come into conflict (or not) and that will produce story. I don't have to think about what's good for the story, I can just think about what the characters would do.
There might be more chance of stuff falling flat that way but it seems like a better creative relationship to have (For me anyway).
@niklinna
Assuming we want story produced by characters in conflict.
On a technical level: There needs to be a situation right. A cast of characters with conflicting interests. We can't really play in any consequential way until that has occurred. So we could introduce characters in the moment and ask questions and get answers as you say. This is kind of how I interpret session one of Apocalypse World to work.
But we could divide those responsibilities up anyway we choose. Like I could create the whole cast of characters including the ones the players are going to play.
I could take a kicker and go away and do it. We could do it communally like in a Wicked Age, I could do it myself like in Fantasy for Real and then the mechanics might introduce more situation I have to weave in.
Basically we need to have a minimum of stuff that exists for stories that are created through character interaction. That minimum stuff is the characters and what they want. I think how we get there is technique dependant. I don't know if I'm a huge fan of the way Apocalypse World does is.