I think the problem is, if you do this sort of super-detailed design work where you document 100s of NPCs, buildings, towns, locations, and histories/cultures/politics/etc. all in great detail, then when the big change comes along, guess what? Its all swept off the table! The City of Pillars is now in ruins, conquered by the Bat People. The Barber Shop no longer exists, Fred the Barber is no more, or he's a refuge someplace, etc.
This is one of the fundamental things I find hazardous about producing this sort of comprehensive detail. It has a cost, and nobody really wants to write down their investment. The GM is invested in the status-quo and stories in such settings will probably largely consist of "maintain the status-quo" sorts of action. As I described in last(?) post, this often leads to 'small character syndrome' where even if the PCs constantly progress in levels they simply face a succession of landscapes within which they can only have marginal effects. That's not tragic, you can tell stories about people who just accomplish stuff that is relevant to them and their immediate environment, but it IS highly constraining! In a way that I am finding isn't always really acknowledged.
Absolutely. This is why I think that worldbuilding with a mind toward playability should eschew that type of hyper-detailed effort. There's potentially a lot of tension between the GM trying to preserve his creation and the players who are just trying to play the game, and aren't concerned about the setting. It doesn't have to be the case, but as someone who used to do that kind of stuff, I can certainly say that it can happen.