Well, consider that example, the characters wander into a village of basket weavers. This is a fictional construct of the GM's. While you can no doubt articulate reasons for said village to exist here, it is far from the only possibility. But adding to this is the sort of things that the process of play you are using does. In, say, Dungeon World the basket weaving would either be color, or maybe address some thematically relevant thing like a PC backstory or a bond. But in trad play where these things are peripheral, things focus naturally on material and operational concerns.
So what we see is that the GM's conception of the world is far more influential in trad forms of play, like living world, than it is in Narrativist play. I'd also say that, generally, Narrativist play has a much simpler and naturally more gamist relationship to system and process. PbtA is great because of the beautiful universal simplicity of process. Players can always get from situation to stakes to mechanics easily and directly. This can be a much more obtuse process in other sorts of systems (FitD etc generally share this, though system complexity varies).
Nobody, certainly not me, is doubting that your approach does what it says it does in a core sense. I am a bit leary of some of the broader claims, based on long experience, but I am certainly not trying to tear anything down. Frankly I think a very clear view of these things allows us to more effectively get what we want.