Radiant AI
Radiant AI was introduced to Oblivion and although it was quite basic, it did lend a level of superficial life to the game world and created a slightly more dynamic role playing experience.
For Skyrim, Bethesda promises to crank up the scope of Radiant AI. Previously, NPCs would head to their designated task location, and then stand around aimlessly until quitting time. Now, NPCs will head off to a number of specially designed jobs and actually perform animated tasks, such as mining, foresting, milling, farming, attending shop fronts, and transporting goods.
The new Radiant AI will be programmed to react to the player based on their relationship experience. Friendships and rivalries can be established based on player actions, and NPCs will react accordingly. A friend may offer food and accommodation to the player, whilst a rival might become hostile merely upon sight.