WIth respect to pemerton's examples in this thread
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both examples snap my suspenders of disbelief pretty hard.
we don't enjoy most modern games for precisely the reasons you list.
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But mainly, verisimilitude is a moving target. I don't have to hit "rightness". I just have to hit close enough, while avoiding hitting "wrongness," and everything works.
I'm an academic lawyer and philosopher. One of the fields I teach and research in is political and social philosophy. By ordinary standards, and even academic standards, I'm fairly well read in historical sociology and the theory of world history (think Marx, Weber etc as the classical authors, and the Frankfurt School, Marshall G Hodgson or Raymond Geuss for more recent authors in the same tradition).
I therefore find the legal, social, economic and religious set-ups of worlds like Greyhawk, Forgotten Realms and their ilk very hard to take seriously. The whole point of games in these settings seems to be to explore the settings, but the settings have, for me, close to zero plausibility (actually, in the case of FR, I'll go all the way to zero).
But other fantasy worlds which are equally absurd in sociological terms - Middle Earth, for example, or REH's Hyborian Age - I can forgive much more easily. This is becaue each of those worlds offers something else up as salient, with the sociology falling into the background. In the case of Tolkien it is the moral struggle expressed via epic fantasy. In the case of REH it's the study in the psychology of an epic individual, expressed via sword-and-sorcery fantasy. And of course, both Tolkien and REH also offer up exciting, engaging stories to which the sociology is just a backdrop.
In the two skill challenges I described, there is a sense in which I see the psychology of a bear, or the behaviour of a hot spring, as a backdrop. The real action is with the PCs. The sorcerer could have tried different ways of dealing with the bear. He could have ducked round the corner and hid (the PC is a bit of a stealth machine). He could have tried some sort of trick to lure it outside (he is also a bit of a bluff machine). But instead he tried to cow it with a display of awesome chaotic power. This tells us something about that PC. For me, it also reflects on the discussion of "anger leads to hate" on one of the cognate threads to this one. I don't particularly care for a game with alignment mechanics or dark side points. If it's really true that anger leads to hate, then let's actually see that happen in play. The encounter with the bear is just part of an experiment, if you'll let me call it that, in which we find out whether a person can master the power of chaos, or whether, ultimately, the chaos will master him.
Likewise with the dwarf knocking stones from a bathing pool to block a spring. Not that long ago, I was looking at that part of the Iliad where Achilles fights the river Scamander. I hadn't had that in mind when I was making notes on the water weird, but when it then came up in play I quite enjoyed the idea of the fighter hurling himself into the water, resisting its surge and then plugging its source. Correcting for the fact that this was all narrated in a pretty easy-going fashion among friend sitting at a dining table covered in barbecue remnants, it had a bit of an epic fantasy feel. In the real world it would be absurd. But no more absurd than the hobbits of the autarkic Shire enjoying a material standard of living comparable to that of an England that was a centre of world trade and production. In both cases, the absurdity is a backdrop to some other, more salient, purpose.
4E "solves" this problem by saying that everyone can participate. It then adds a new but related problem by heavily framing things such that everyone is strongly encouraged to participate equally.
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I'm not sure about pemerton's motivations, but I know some of the things that I do which resemble his approach are largely in order to make the game fit what the players want to do anyway--and very conciously with letting it flow and adapt as the players change their priorities over time.
My first goal is to frame scenes that encourage maximum participation by all the players - I've GMed games in the past where the spotlight moves around, and am enjoying trying something different from that at the moment.
My second goal is to see how the players express their PCs, and to try to frame scenes that permit, or even encourage them, to explore the limits of what they're prepared to have their PCs do, even (or especially) when this introduces tensions with what has happened in the past, or what the other PCs want now.
Examples: the dwarf (who is a multi-class cleric of Moradin, is a proponent of no-nonsense common sense, and is of the view that people make their own fates) frequently comes into disagreement with the three Raven Queen cultists. One of the Raven Queen cultists, though, has recently retrained from multi-class cleric of the Raven Queen to multi-class invoker - and as an invoker predominantly serves Erathis, Ioun and Vecna (his theory being that knowledge depends upon civilisation, that some knowledge is what it is only because it is secret, and furthermore that all knowledge in the end is forgotten and so becomes secret by default - his only objection to Vecna is that Vecna confuses secrets
as a means with secrecy as an end in itself). This same PC, who is also the only one of the PCs who has committed vengeful executions (in one case, in fact, something closer to vengeful murder), is constantly on guard against the chaos sorcerer slipping into demon worship.
I felt the skill challenges I've described here, as they were resolved, let various aspects of these personalities - and the tensions between them - come out, even if in comparatively modest ways.