I think it could be cool for background NPC dialogue in big open RPGs like Skyrim. Imagine if townsfolk could have realistic conversations and interactions like bartering over goods, etc. Nothing major or plot-dependent, obviously. Just something more natural than a handful of repeated, scripted and prerecorded phrases.
I would compare it to ray-tracing. Ray tracing means the artists don't have to plan out every single light beam, and the result is actually more realistic than if they had. A tactfully used LLM could mean they don't have to script out every line of background dialogue and also achieve a more realistic result.
Ah cool, I'm not surprised. The Skyrim modding community is insane.