There's a lot going on in Morrowind, numerous factions, tons of history, and it's all somewhat atypical for fantasy games. Definitely not high fantasy with mages and castles and kings, and far more unique than the rest of the series. Oblivion and Skyrim were a big letdown in terms of world building compared to Morrowind.
I love the lore/story of Banner Saga, especially how it evokes so much of Norse myth while still creating it's own setting and cosmology. It helps that they write so many smaller scenarios to make it feel fleshed out as you journey through the main plot.
One of my first experiences of being in a place that actually felt real is Stalker: Shadow of Chernobyl. The way the npcs all seem to be going on with their lives, the way animals hunt eachother (and you), the way the map was just open enough to feel expansive but just small enough to feel dense, it always felt real, and that made the horror of it all so much more real as well. I still think the only true competition these games have is themselves, but what they do isn't necessarily the kind of world building built on rich writing and a well thought out world with deep history, it's all about the moment to moment existence in a well realized setting. It's texture, not history, if that makes any sense, but I think it still counts as world building, even if it's still slightly based in reality.
What I might consider the best world building in a very different way to Stalker's approach is of course Dark Souls, but Bloodborne might be tied. Each of them is perfect at giving you pieces of the overall picture, enough to make you want more and just enough to figure out all the stuff they don't tell you. Look at it this way, people were able to figure out what Dark Souls' DLC was going to be, and where it was going to be set, based entirely based on item descriptions and map geography, before it was officially announced. No leaks, no datamining, and clearly the game wasn't putting up obvious hits either.
In Dark Souls and Bloodborne, everything builds towards a cohesive setting, from all the items you pick up to even some of the smallest details in the environment and enemies. The way it all fits together is just staggering. Bloodborne has more dense environments, which helps it, but the way Dark Souls' lore all fits together more than makes up for it's fairly sparse and/or videogamey environments. That said, I can appreciate Bloodborne for how everything doesn't necessarily fit together, it suits the Lovecraftian nature of the game to have the Cosmic elements always just outside our grasp.
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