Analysis of information sources in references of the Wikipedia article "Radiant AI" in English language version.
"The other thing it does is give the game a more organic feel than scripting could. NPC's won't always be standing there doing the exact same thing at the same time. The fact that your experience and what's going on in the world around you in your game is a bit different than other people is pretty cool. The conversations you'll overhear and subsequent quests you'll be able to get as a result will vary. It makes the world feel much more realistic and alive."
To add meaning -- and perhaps drama -- the system determines which NPC should be captured by examining your character's history and picking an NPC that you've actually had a relationship with in the past.
"We can use it for miscellaneous quests, you go into town, you want to make friends with somebody, we'll generate a little quest for him that seems simple and that it's ok to go through the radiant story system. For a bigger quest, we want somebody who you're enemies with. We want to use him in that quest in some way. We'll pick the closest person who hates the player. He fills in that role."
Like Oblivion, we use our Radiant AI system, so most of the NPCs eat, sleep, work, etc