Reynard said:
I think this cuts to the core of the disconnect we're having: variable definitions for "setting design" and "adventure design".
Reading this, I tend to agree that the biggest actual contention is in terminology.
If you are creating a world in which the PCs are encouraged to pursue their own agendas (i.e., devise their own hooks, rather than following an adventure path) then the context in which they do so is
both setting and adventure design. Conversely, if you are creating an adventure path, all background materials and overplots for that path are also
both setting and adventure design.
The things that I am seeing here amount to "Why do more design work than is immediately necessary?" wherein, based on playstyles, what is "immediately necessary" differs a great deal.
Should you prepare for or design encounters that the PCs may never have? 1e modules seemed to think that you should, 2e and 3e modules seem to think that you should not. Myself, I prefer the 1e method, but since 3e is labor-intensive in terms of stat-blocks, I find that I do an oversketch using generic stat blocks but non-generic fluff, and only do fully fleshed out versions of locations (stat blocks and full descriptions) after I know the players are interested. I create enough to "wing" any location the PCs can reach, while doing focused work on areas that either interest me or interest one or more PCs.
(Since I run games in the same world, though, I feel that what is ignored by one group of PCs may well be of interest to another group of PCs, so the effort is far from wasted. YMMV.)
RC