Because AI is not good or interesting.

I've said this before: In Mass Effect, characters are interesting because they are unique, principled, not always right, and are tested. Garrus for example is a former law enforcement official who got upsetty spaghetti about how sometimes the law fails to catch a criminal so he decides to start murdering them instead. In the course of several missions, you as the player personally experience this dynamic, hearing his story, seeing how the failure of real justice impacts people, talk with Garrus about his beliefs and how they changed, you can critique his position and point out ideals or whatever, and then after an hour of directly chewing on and mulling over the finer points of this textbook moral quandary, you are put in a position to make a snap decision whether you should kill a bad guy or let the courts handle it, including having your own motivations and incentives.

AI doesn't do that. There's no internal consistency, and certainly not consistency with the surrounding game. It won't build a character to explore a point, and also build levels and game and even background events to tie in with it. Do you remember any characters from playing AI dungeon a few years ago? People remember Garrus for decades.

Go read an AI generated book, they aren't very good. They aren't trying to say anything. They don't have a unique perspective or set of ideals they want to explore. They don't have a purpose in their content creation.

If you burn immense effort tuning a procedural generation system, it will occasionally spit out content that seems to have a story, but 95% of it will just be unconnected boring mush. Game paste.

If you want to know what a LLM produced story looks like go play a recent Call of Duty Campaign. It's just a list of 5 second Set Pieces and the entire point of the game is just to be dragged through set piece after set piece with barely the fragrance of a narrative in there. It's utterly boring and desensitizing.