I've often thought about this too.

I think there are 2 main reasons we don't see much of that:

1. immersive simulation is HARD.
2. there is something innate about combat-as-play. it used to really bother me how hard (though certainly not impossible) it is to think of cool game ideas that don't involve combat, and then I started to think about how basically every land animal that plays does play-fighting. Like, there seem to be a few major categories of play: racing, fighting, and for humans, simulation (e.g. the Sims, Farming Simulator, playing with dolls irl, etc). Part of the appeal of roleplay is that it allows us to go beyond that, but video games struggle to handle such a large space of possibilities.

Skyrim is the reigning king of intractable worlds, especially with mods. You can befriend animals, build houses, harvest crops, get married...

That's also one of the reasons The Witcher 3 remains my top game of all time. The world feels alive, and you can sit down and play cards or flirt or catch up with old friends or watch a play.