There are lots of games with destructible environments and thousands or tens of thousands of interactive objects moving around, the static world you're describi

There are lots of games with destructible environments and thousands or tens of thousands of interactive objects moving around, the static world you're describing hasn't been the Only Way for quite a while. Ignoring the obvious cases like Minecraft, Red Faction and Fortnite, even games where it isn't relevant to the gameplay still implement it sometimes - for example, The Division (2016) had fully destructible walls in many locations and if you fired enough rounds into a concrete wall you could punch a big hole in it that could be seen through and fired through to attack enemies or heal allies. This sort of thing doesn't have to come at the expense of visuals either, modern rendering tech along the lines of Unreal's Lumen & Nanite can adapt to changes in the environment and handle massive dynamic crowds of people or groups of cars. You can quite literally point at an arbitrary part of a rock wall and move it over a bit then make it bigger depending on the engine you're using. It's why Unreal Engine has got a foothold in TV production.