Are we talking about simulated NPC factions à la Millénaire for Minecraft, where the NPCs had villages that really grew if you gave them resources (and manpower)? Where they built “automatically” new houses if required?
The problem with such a thing (which is also visible in Millenaire) is that it requires a lot of calculation power. Each NPC needs to be simulated much more carefully, instead of a simple “walk outside at day, sleep in a bed at night.” You need to simulate them as you would a player’s villager and then some more, because something needs to interactively react to events (i.e. you need to script a primitive “player”).
It’s much easier to say “If the town is happy and trade is going well, every three days we build a new house and every day you get another villager”. This is simple, doesn’t require much calculation and frankly is sufficient I think. You’re going to spend most of the time in your town, not some NPC’s one. So in the end, you wouldn’t notice all those smooth, little changes that happen because your attention is completely elsewhere.
If that’s what you meant.
(Edit: As a side note, I absolutely adore Millenaire. It’s really cute to “grow” a settlement or even multiple, see them grow up and everything - but sadly, back when I’ve played it (around MC 1.3), it was just too laggy.)