Welcome to the Hamster Wheel!

So, the other day, I was talking with somebody who was interested in working on an RPG, and was excited with the idea of a more conversation focused game, but had a small issue with it:

The other problem with conversation-based instances/encounters is that I'm unsure how they'd have signifigance to the game aside from "that was interesting." The player could gain items, but what signifigance do they have? Are they just used for the next instance?

This statement is, well, interesting, and it is fairly common among gamers. If I don't get something cool out of it, what was the point? Why did I run across the country just to get some boots that I'm never going to use?
If you give them an awesome sword, they get excited, now they can go out and smite evil even better! But what's the significance of that sword? It just lets them kill monsters for more treasure to be able to kill bigger monsters to get even more treasure. World of Warcraft, in particular, is all about this process, known colloquially as the hamster wheel. Sure, to experience the whole story, you need the better gear, but very few people raid for the story- the story is best experienced through quests.

In Skyrim, the game levels with you, if you just play the story, you're not going to need the best equipment to do what you want. The game does get easier if you focus on equipment, but the game catches up to you- getting better equipment makes the game easier only temporarily, and getting better skills, well, that can make the game harder for you.

D&D is all about the hamster wheel. The DMG (Dungeon Master's Guide) has explicit instructions for keeping the opponents on the same level as the players, so that they face the same degree of challenge as the game continues.

Of course, that makes sense, a little, doesn't it? If games got easier the farther along you played, the early game would be the hardest, and once you finished that, the game would just get easier and easier, making your newer accomplishments feel less good. If you get to the final boss and just 1-shot them because you're so much more powerful than them, you're not being rewarded. If you manage to beat a boss incredibly easily because of tactical and strategic choices, that's a lot more rewarding.

If the game becomes constantly harder and there is no way to deal with it, other than "playing better" it feels awful when you get to the point where you are playing your best and can't progress any further. Additionally, if the game is below your skill, it is possible that you never notice it getting harder.

Ideally the game will get harder, but the difficulty is offset by tactics and strategies that become available to the player as they progress. Since the play continues to become more difficult, the player can see their progress- when they go back to the beginning of the game, they can note their improvement. However, this model is better than just straight increasing the enemies damage and health (for example) because the player gains new resources that allow them to approach the encounter differently.

It can be difficult to remove the hamster wheel, because you want players to begin by fighting bandits and wolves (screw fighting rats- only Oblivion* did that well) and end with defeating dragons and demi-gods. By slowly giving the player access to more abilities and tactics, they can learn how to optimally use their tools. Additionally, with a slow pace of upgrades, they have time to experiment and fiddle with how to use them, and can discover combos or synergies that they wouldn't have discovered if they had been dumped on them all at once. From an RPG perspective, you get the added benefit of character customization, and the story-arc of of character training and advancement.

But to address the initial concern, shouldn't the important part of a plot driven RPG be the conversations? You can ignore the hamster wheel, and instead of constantly upgrading but never getting better, you can leave combat static, but have the value of the interactions by the interactions themselves. If the story and decisions are compelling (as they should be in a plot-driven RPG) then the game works well as a vessel for story telling, which is the goal of the game. Ideally, the mechanics are designed such that the parts of the game not vital to the story, are in fact, important to the cohesion of the game as a whole.

*The rats weren't the problem. The problem was the Mountain Lion.