Let's say there are different approaches to ©RPGs.
The two extremes are: Number crunching, stat-heavy rpgs with gameplay clearly defined by a rather tight ruleset.
What you can do is mostly defined by the character (class) you play. Often there's not much flavor stuff in those games if it isn't necessary to the games completion.
This is the classical, oldest form of cRPGs.
And the other form of RPG, where your character is mostly defined only loosely by stats and class and the more defining aspect is what you choose to do.
However, for this to be more than mere "pretending", the game should recognize it and interact with it meaningfully.
There's nothing wrong with either of those approaches, and personally I would argue that a good cRPG should offer both to some extend.
Both have their up- and downsides, though.
The ideal a cRPG should try to reach, imho, is the original pencil&paper roleplaying experience, which offers the best synthesis of rule-based and player-driven gameplay (that probably will never be possible to simulate in a cRPG, due to cRPGs missing an human DM).
The problem I personally see with something like Hearthfire is that it's leaning too much towards "pretending", without much substance behind it.
If pretending to live in a cottage in Tamriel with your waifu (that will never do much more than mutter the same sentences over and over or maybe make the screen fade to black) and raise children (that will never grow/change/bring you beer) is what makes you happy, fine for you. I think it's pointless.
If it would offer some nice quests, with good writing, some challenge, riddles, integration with the world, etc., I might consider it.
But I'm pretty sceptic about that. And being on PC, I can anyway just download a mod that does most of it for free...