One area where current advances in (chatbot-style) AI would make a lot of sense to apply in games is to make non-critical (for gameplay) interactions with NPCs

One area where current advances in (chatbot-style) AI would make a lot of sense to apply in games is to make non-critical (for gameplay) interactions with NPCs more interesting, just as "background noise" to make the game world feel more alive. E.g. you could start an "interesting" conversation with a random NPC in GTA or Hitman instead of getting the same pre-canned reactions over and over. The downside then however is that the scripted characters which are important for driving the story forward will feel like pre-programmed robots compared to any 'unpredictable' random NPC ;)