When an author writes a story, everything the book mentions revolves around the heroes.
That is how it works.
I don't think that that is true. I'm having a hard time thinking of an example that holds true for. I think you are trying to affirm the truth of Chekhov's Gun, using different words, but I don't even think Chekhov's Gun holds true as an absolute principle (Hemingway famously rejected it) but your restatement here of it is even less true than what Chekhov was claiming. Chekov claimed all elements of the story must be necessary to the story, but that's not the same as claiming all elements of the story must revolve around the protagonist. (And again, you are mixing up 'hero' and 'protagonist'.)
Yes, I realize we are just arguing semantics here, but semantics are important. Because when we get to this statement:
That is when the players care about the setting.
I want to agree with that idea, but how you built up to it is I think wrong and misleading. Yes, the majority of players only care about the lore setting in as much as they think that lore will inform and impact the propositions that they make in play. (I can imagine a player who has Sensation as a primary Aesthetic of play and who therefore likes being narrated to for its own sake, but I think that's rare.) On that I think we largely agree. But I don't agree that the lore of the setting must literally revolve around the protagonists in order for them to care about. If anything, good setting lore tends to make the protagonists revolve around the setting (as it were).
In a D&D game, there is an interaction, a kind of dialogue between the heroes and the world. The DM chooses how to respond to the heroes.
And see I'm with you through that, and want to agree, but then you enter into these simplified abstractions and you lose me.
The entire world is the character that the DM plays.
No.
Yes, the job of the DM is to bring the setting to life, but to say that the setting is a character is to risk a great deal of information loss and create a lot of misunderstanding. There are big differences between the concepts of "setting", "NPC", and "PC". The DM has to maintain a certain degree of impartiality. In my game I have this concept of "demographics" which is one of the first things I establish for myself when planning a campaign, and it has to do with "what are average things in the setting like". It's baseline that I use to establish what anything I didn't prepare ahead of time is probably like so that when I have to improvise I have a baseline for what is fair. That's part of the setting. I'm running a Star Wars campaign right now, and so there is a ton of preexisting lore out there that by definition wasn't created to revolve around the PC's in my game. A lot of the time what I'm doing with lore is establishing to the players, "Yes, this is a Star Wars universe." I'm creating a feel to the universe that is supposedly frequently remind them of the Star Wars movies (especially the original trilogy). This has nothing to do necessarily with the PCs. It's just building a living world that draws on the players pre-existing out of game feelings.
This is not the same thing as animating an NPC or a PC. My relationship to the setting is different than my relationship to an NPC, and my ethos and relationship to an NPC when I'm a DM is different than my relationship to a PC when I'm a player. Let's just not confuse that. A "DM PC" is a problem that arises when the relationship and aesthetics of play the DM has to an NPC becomes that of a player to a PC, and it's a bad thing. The setting is literally only the time and place of a story. Sometimes people say, "The setting became almost a character in the story" when the setting is particularly richly illustrated, but that's only a metaphor. It's not a literally true claim.