That's because the depth of the game is in the fighting. The character personalities, lifestyles, and beliefs don't evolve, but their levels, stats, equipment, and inventory does.
Think about it: in Dragon Age, you have a bunch of reasonably interesting (if very stock) characters. DA is one of the few games to really highlight intercharacter interactions. Not only do you actually have a camp where everyone hangs out and they try to sell you for-pay DLC, but while you're wandering around the characters will usually chat amongst themselves. Out of all of the RPGs you can get, this is probably the one with the most intercharacter interactions and character arcs.
However, even then it is incredibly bad at it compared to even the most poorly-run of tabletop games.
The problem is that the way we interact with characters is via interactive dialogs. This is a terrible way to do it. Firstly, because we don't have a personality, so it's hard to contrast them against us. Secondly, because the fundamental concept of a dialog tree and relationship end states is awful.
As an example, look at the characters in Dragon Age. Alistair is a templar that is secretly a high prince. Morrigan is a total jerk that is inheriting an exotic form of blood magic while living in a forest. Wynne is an elderly mage that has been secretly resurrected by a spirit that isn't supposed to exist.
Dialog is really the only way to get to know these characters, and the dialog engine is a branching tree. So when you talk to these characters, you slowly learn their stories bit by bit as the game progresses. However, the backstories are literally just grist for the dialog wheel. Since you can only get to know them through dialog, you need to have scads and scads of dialog.
If you remove their backstory, what happens? Your labyrinthine dialogs vanish.
Does that make them worse characters?
Not really. In fact, I would argue it makes them better characters, because it allows them to shine without being caged by their pasts. BUT. You can't get to know them through dialog trees very well at all.
Think about the memorable characters in movies and books. Han Solo didn't have any backstory beyond "I need money and I have a space ship". Frodo and Sam didn't have any backstory besides "We grew up in a farming village". Even characters that did have backstory, such as Vader or Luke, didn't have giant discussions about it. Instead the backstory existed to drive the plot, not the characters.
Movies and books understand that backstories are not characterization.
These characters grow on you because of the way they interact with each other and with the world, not in describing their painful pasts. It may be that they do have a scene where they tearfully recall something, but it's not the primary means of characterization and you could even argue that their backstories are allowing them to express their character by how they deal with the past rather than actually defining their character in itself.
We don't really do this much in games, because we like dialog trees.
Dragon Age's chitchat method was really good. We got to see all the characters defining themselves relative to each other, often in very delicately constructed ways - like the way Alistair was gently spoiled, and how Wynne took some joy in being motherly but just as much joy in snapping the preconceptions of youth. Almost none of this had to do with backstory, except in a few situations where the backstory gave a topic of discussion and the two people could define themselves relative to it as well as each other.
And... that was beautiful. It was very good.
Then you talk to them and it's like EXPOSITIONEXPOSITIONEXPOSITIONloyaltyquestEXPOSITIONEXPOSITION okay, choose whether I'm your friend or your lover.
Dialog itself is not the problem. As you can see, I like dialog when it's not mistreated. The problem is that video games abuse dialog horribly, and that needs to stop.
1) Dialog is not monologue.Nearly every time you talk with a party member in an RPG, it's not a dialog. It's them talking while you either nod or shake your head. While you can certainly pound home the other person's most basic personality traits by what they are willing to say, they don't have any opportunity for give and take, no opportunity to define themself in relation to your personality except in the most primitive ways.
2) Dialog is not interactive.If the player gets to choose how to respond during a social conversation, you've made a mistake. There are no meaningful choices to be had there. Even in real life, we rarely pause to decide how to respond to a social interaction, because we already have a good feel for the sort of tone and subject matter this relationship is comfortable with. The only pauses we really see are when we're totally blindsided or when we're trying to come up with something new to say. And those can be considered actions, rather than lines of dialog.
Because of this, I recommend you make the player choose ahead of time. For example, "assign two adjectives to each party member as you meet them. These will determine how you interact with them. You can change this at any time."
3) Interaction should not be centralized.Perhaps the most core problem is that everyone is interacting with you, and you alone. Even if you did have a personality, it would be quite a limited spectrum of contrasts. Dragon Age's strength comes from the interactions of their characters with each other. This allows you to use a much greater palette and get a much more nuanced picture of who the characters are.
One way to make this happen in an RPG is to not have a primary avatar. This used to be popular, but has fallen out of style recently. Maybe we could bring it back.
Another way to happen is to make the interactions between the other characters the primary social interactions, and interacting with the player a very secondary kind of interaction. For example, if you play a spirit or a starship or something while everyone else is an adventurer, they'll have a pretty basic but deep relationship with you while having a very nuanced relationship to each other.
4) Interaction should not be dialog.Who needs dialog? Well, okay, dialog is not a bad way to have characters define themselves, but it's vastly over-rated.
Sam and Frodo, for example. Sam's character is defined more in how he relates to Frodo: his loyalty and courage shine through in all the details. He sets up camp, carries the heaviest loads, watches for danger, urges Frodo to act more safely, and so on. Some of this is reflected in dialog, but much of it is reflected through either actions or simple body language. Imagine if, in Dragon's Age, Alistair continually stared at you and would step between you and any vaguely dangerous-looking NPC as you wandered through towns, and even insist on opening shop doors and going through first?
Or even just imagine that he would push you off of traps or help you out of them.
Some of this would be difficult to pull off because of the mechanics of how the player plays the game. Usually players want to dash from point A to point B at maximum speed, and there's not a lot of room there for body language or interactions with the environment. But I'm sure a clever developer could come up with some way to do something, like how Dragon Age has chitchat that works fine even if you're dashing at full speed through very dull caves.
Anyway, this relates to some ideas I have on how to script characters - especially randomly generated ones - but I think I'll go over that some other day. I'd also like to talk about the evolution of character relationships and characters themselves - I think the paradigm we've got now is pretty crappy and overly confining. But you can sort of see where I'll go with that by thinking about how a game with no player avatar would run if the characters could get into relationships with each other.
Hm. Lots of thinking to do.