IMHO that is pretty much what a lot of common narrative type games are doing. Blades is just a whole ton of stuff that is BOUND to relate to the type of characters and situations that arise within its specific milieu. Dungeon World requires the GM to construct fronts which are intended to generate forward motion within the setting, so that the PCs do something, consequences are produced, and it all pulls at the characters. The GM frames all the scenes in both of these games, and the players interact PURELY via fiction in Dungeon World, except to answer GM questions. Players have a bit more mechanical work in BitD as they are involved in determining position and effect (though a player could simply leave that all on the GM, you could pretty much remain in character all the way through a score).Seems as though this is something of a false dichotomy. There's no reason a GM cannot prep a setting in which situations arise that directly engage the characters' backstories and motivations and whatnot. The players can provide elements the GM can grab and the GM can determine what those elements look like in their setting and how they emerge for the characters to address. All the players need to do is play their characters and the story happens.
This is where discussions here often get a bit off. While not all games are made equal, the ones I play at least DO NOT have the players making up scenes, that's the GM's purview. Torchbearer works this way as well, the GM paints each scene. That being said, the scenes are not planned out by the GM, the GM is not 'grabbing elements' and mapping out some way to weave them in. Those elements are ALL of the story, any preexisting background, or GM prep is just stirring the pot or providing a palette of elements to draw from when needed.
To relate this closely to the subject of the thread, these two extremes, an entirely GM/pre written adventure and a fully narrative low myth game ala most PbtAs use prep for very different purposes. A D&D module is an environment, fully realized, where the player's job is navigation and some degree of extrapolation/embellishment and then seeing how the specific characters will work through that. PbtAs use prep (fronts basically) as a way to just 'stir things up', and provide a bit of a sense that stuff is going on in the world beyond what the characters see. Critically, it never pushes play in a specific planned direction.