I can't explain everything here for fear I will produce something of the TL;DR variety of posts (which, I fear, this post already is). But I will get into some general ideas to set the background. I don't get into too many specifics here but just talk about the general approach and a few superficial examples. This is a topic for a much longer discussion. If anyone here is interested in MMO design I'd really like some collaboration on developing these ideas properly.
To make an MMO dynamic for each one of millions of players is certainly a formidable task, Jim. I don't claim to have all the answers, but I have an approach which I feel is a step in the right direction. Naturally building a fully-fledged MMO such as this would take about as much developer muscle as Blizzard's World of Warcraft team, but let's put out the practical issues for a while now. I really would like to discuss the potential ways in which MMO design can be furthered in such a way that it is less monotonous and more unpredictable to those millions -- even if it doesn't quite make every one of those million+ players feel special.
I spoke to a professor of game design at my university and he suggested that I develop my ideas, compose a few letters and try to get them into industry periodicals and magazines like Gamasutra.
Now, my own fields/background are/is theoretical computer science, and electrical and electronics engineering. My research area of interest happens to be (mathematics) stochastic optimization, nonlinear equations and the relationship of said equations to a rather interesting property called emergence. As such, I'm not a game designer per se, but when it comes to game design (esp of the MMO and RTS variety) I have at least a few strong opinions. These opinions developed out of my own interest and investigation into the phenomena of nonlinear systems and emergence, and my interest in MMORPGs. More on that later, but for now...
Emergent Game Design
I mentioned emergence. Many have likely heard of it, but for good measure:
Emergence is the observation that in complex systems, the interaction of simple local rules can produce complex global behaviour.
There are multitudes of examples such as the swarming behaviour of bees and starling (check out one of my old videos: http://www.youtube.com/watch?v=SV2CwQdroZg this one is a system of balls each of which behaves like a single starling (bird) - the result is a starling swarm similar to this: http://www.youtube.com/watch?v=XH-groCeKbE&NR=1). But emergence goes beyond that. The formation of societies, the developments and clashes of civilizations, the discovery of penicillin, and World War 2, are all actually a consequence of emergence. The thing that makes the living world vibrant and fresh (even though we tend to let ourselves settle into humdrum lives) is this property. It happens to hold great interest to me because I think keeping this phenomenon centre-stage when defining rules for a virtual world will provide tantalising ways of keeping an MMO world alive and vibrant -- much like the real world. Often this does not directly translate into complexity because there are usually SIMPLE ways of implementing the rules. The complexity that arises is EMERGENT... This is the beauty and elegance of using emergence as part of the solution.
(I understand I am not getting into specifics. Rest assured, I have a very specific model in mind for a very specific MMORPG set in a fantasy setting, but I think this bit of design philosophy is important, and it transcends the example of my single MMORPG.)
Rules for Emergence
So some rules emerge. The idea is to define rules that promote emergence rather than restrict it. In the mathematics we know why emergence occurs. E.g. if you look at that video above you'll see how those particles interact in an extremely lifelike yet unpredictable manner. At the same you can stop and think about a system consisting of marbles being jostled about. While those marbles also behave interestingly you don't find the sample complex behaviour. The behaviour of the marbles are readily reducible to their individual components and the simple laws of newtonian mechanics. The starling on the other hand were thought to have a group-soul (and various other fantastical ideas were proposed) before the mathematical and computational study of emergence.
The question now emerges as to why there is a difference. Mathematics provides the answer. In a linear system we find no emergence. In a nonlinear system we MAY find emergence. In such a nonlienar system if we also satisfy the condition that each individual component has behaviour that is 'tightly' coupled to other components, we tend to see the rise of emergent behaviour as with starling swarms. In the second system of marbles (described by classical mechanics) the interactions between marbles are 'weak' interactions and therefore do not promote emergent behaviour. This is also the problem with MMORPGs today...
The Problem with MMORPGs Today
In MMOs we have players and objects that exist in the world such that the interactions between each other are restricted to all but the most simplest forms. For an MMO to be truly dynamic the mathematics tells us that
1. The system should be highly nonlinear
2. individual components of the system should be bound by strong interactions/couplings
All mainstream MMOs lack this (WoW, WARHAMMER, LOTRO, etc). Some niche MMOs (Mortal Online, Darkfall) have tried to implement something similar without properly understanding the underlying forces at work here, and also due to small budgets they have not succeeded as eminently as one would have hoped.
The Mathematics of 'Dynamic Gameplay' and Rift
With the most recent attempt, Rift, Trion attempted to bring 'dynamics' to their world -- however they did not quite succeed because nobody on the design team seems to have any understanding of dynamics or 'dynamical systems'. This colloquial word we use ("dynamic") is really a property of nonlinear dynamical systems that implies the system is NOT RANDOM BUT IS STILL UNPREDICTABLE. How can something non-random be unpredictable you ask? Mathematicians have a very good understanding of this and we call it deterministic chaos. Trion on the other hand simply added non-determinism or randomness and NOT deterministic chaos to their game. That is not what the common person means when they simply say, "Dude. I wish my MMO was freaking dynamic and awesome!" This latter distinction between (deterministic) chaos and (nondeterministic) randomness is an extremely crucial one. (Skip without discontinuity: If you want a bit more formalism, we tend to talk about the divergence of close trajectories in phase space (predicated by the existence of positive Lyapunov exponents). While this certainly happens in any MMO, this happens because humans are different and their minds are chaotic -- not necessarily because the gameplay is nonlinear and emergent. At this level the goal is to make the gameworld itself progress in such a way that close trajectories in phase space diverge widely in their time-evolution.)
Rift Faultline
Any new player will tell you Rifts are interesting. Any player at a higher level will tell you that Rifts get boring after a while. Sure, Trions aim was to make the world dynamic. But what they failed at was strongly coupling interactions and instead opted for increased randomness to their world. To explain further: sadly, random Rifts spawning at random locations does not, a dynamic game world, make. Why? Because all it does is introduce what mathematicians called stochasticity (nondeterminism), but which more-or-less simply means 'randomness' or 'noise' -- Yes, noise. One common form of randomness used in mathematics, engineering, physics, etc is the Wiener process or 'white noise' - and what Trion did was add noise to their game. Sure, we can never predict what type of Rift will open and where it will open. However, what type of dynamic gameplay do these Rifts engender? None at all. It is the same old gameplay of grinding mobs till you see the words "Rift Closed" appear.
So what do we need?
WE need a game with a setting like Rift or WoW, but where there are rules that cause strong couplings between players and between players and gameworld objects, and between gameworld objects and other gameworld objects. We need to create rules in the system such that there is chaos. If you want to look at it mathematically, then what we need is this: A world where the underlying equations are governed by nonlinear differential equations (or difference equations) with lyapunov exponents.
And it is actually possible to achieve this without doing any formal mathematics at all but rather simply using some very simple heuristics.
An example of Rule Based Emergence
As we've established, carefully crafted rules can cause these strong couplings that give rise to emergence. e.g. take a simple example from the real world (and we know the real world is chaotic, complex and unpredictable)...
At one point in history there was no police force. This was fine in small tribes when criminals would have been kicked out but when societies grew large it wasn't easy to keep track of criminals nor of crimes. Enter the police force. The police force is the example of a rule impacting a nonlinear system, giving rise to an emergent result. The result of the police force being introduced has a negative impact on crime rate. But it also causes side effects such as
a) criminals who kill cops... This triggers harsher punishments for criminals who kill cops.

c) In turn criminals become smarter and more ruthless... (this is called Red Queen Chaos and is a topic that is intensely studied in mathematical biology)
These are just examples of how emergence impacts the world. Rules such as this can be crafted for any situation. For example, if I were to come up with the simplest form of rule-based emergence: say I wanted to promote world pvp in a game like World of Warcraft, you could do it by adding a loot table to player kills in the open world and having players drop stuff. The better the PVP gear worn by the enemy, the better his drop will be. Perhaps add a rare chance for him to drop some random epic item. These could be dropped from a generated loot table and not from the players inventory... Or say, a player could drop several gold if he is killed... Such a rule would promote players fighting each other in the gameworld because now it isn't just a simple diversion.
However, there are far more interesting ways of doing this. Of weaving emergence into gameworld from the bottom up so that the world can become an exciting place by player's own interactions. Such a game need not be hopelessly complex. At least not more complex than the next MMO.
An Emergent MMO Example
A quick example of an emergent MMO. A forum post like this can't do it justice but I will get a few ideas across. Our example will be an RTS and RPG hybrid. This hybridisation creates a gameworld that is everchanging. People are building castles in a zone and marching an army over the road, while a group of adventurers slink through the forests in search of a cave entrance that leads to the lair of some dragon (boss).
Game Features
* Imagine a world much like that of WoW or Rift.
* But with three distinct play styles (1. Artisan/crafter, 2. Adventurer/hero, 3. Ruler/General).
* The game hybridizes the MMORPG with the RTS
Action Combat:
* Combat is action based. Similar to hack n slash RPGs or Lara Croft and the Guardian of Light. It is not click based. Needs aiming. Playable with a game controller (like xbox)
* Abilities are combo moves like in Street Fighter. Higher level abilities are more complex combo moves. So instead of Pyroblast (WoW) taking 6 secs to cast, it happens to be a more complicated combo than say fireball (2.5 sec cast in WoW)
* Spells can be cast while moving. You can also 'prime a spell. i.e. press the cast button and hold on to it, and release it when you want to.
* Priming a spell for longer can make it generate more power and thus do more damage. However, the longer you hold a spell, the higher the chance it will backfire and explode in your face. Combat will be
* A high spell skill will also reduce the likelihood it will explode in your face when priming. (Skills are explained below)
E.g. of another potential rule. Say we wanted mages to walk rather than run all the time. It simply fits their image better. Mages tend to walk while warriors run around because Mages are less 'physical'. Easy, to add to those we add this rule: 'Running while casting increases cast time. however walking while casting has no detrimental effect on cast time.' Something as simple as this will result in mages walking more often than running. This mirrors fantasy literature/movies etc.
Skill-Based System:
* A skill-based system where every ability has a skill value that can be raised. We use a logarithmic curve to model the growth of any single skill. In other words it will be easier to get the first 10 skill points than the second 10. The second 10 are easier than the third 10. i.e. as your skill rises it gets increasingly difficult to increase it further.
* Several classes with each having a particularly developed primary stat: Knight (Chivalry), Warrior (Strength), Archer (Dexterity), Cleric (Faith), Sorcerer (Intellect) - e.g. Warriors have intellect, but not high enough to be useful to learn magic.
* Each stat also has a DELTA VALUE (E.g. DELTA_STR, DELTA_INT, DELTA_FAITH, DELTA_CHIV, etc). This value determines how quickly that primary stat increases as the player levels up. So a Sorcerer has a higher starting intellect than others and also has a higher starting DELTA_INT than otheres, and this allows the sorcerer to rapidly develop his int as he levels up and uses his spells
Quests (The key to making quests fun is to make gameplay and combat fun. Action combat in the first instance will be a big step in that direction)
* Current MMO quests are essentially miniquests. These quests will be around in the game but award little XP
* The standard quests, on the other hand, will be Major Quests. You will only need to do a few quests to reach max level. Say 1 major quest gets you 5 levels. You will, at any time be on only 1 major quest. Along the way you may finish some minor quests to satisfy sub tasks or out of interest
* So about 5-6 major quests will get you all the way to lvl 30
* Major quests will be complex and nonlinear. There will be multitudes of ways to finish a major quest and no amount of googling will give you a step-by-step. These quests will be an important part of your learning process. They'll be of the "Take the ring to mordor" variety.
* There will be at least 1 class-based major quest which will teach you important things or make you connect with your class in a very important way through it.
I have more ideas on quests but they are still in their infancy.
Gameplay:
* Three Faction System: Three factions at constant war (No cross faction alliances - this forces the two weaker factions to ally against the stronger faction for self-preservation. Survival is only ensured by maintaining the balance of power.)
* Each faction has a few races (let's say, three). Each race has a capital city in the home zone. Capital cities and home zones are safe zones. (No in-infaction fighting in these safe zones. (Also an excellent area for players who are artisans to sell their wares, do their crafting, design keeps and siege weapons and buildings, create blueprints, etc.)
* Other zones are not safe zones and players can attack each other. Guilds can attack one another
* The first big chunk of the game (say until level 30) is played out in a very linear fashion similar to other MMOs. This bit goes fast so that the player learns the game, learns what to do and reaches a certain degree of power where he is not totally helpless.
* At this point the gameplay becomes more sandbox and less restrictive. It is now upto the player to decide which play style he wants to follow (Artisan, Hero, Ruler)
War system:
* There is a diplomacy system similar to Age of Empires II. Players can offer alliances... Ultimately they will want to set aside their differences because as they travel the world, their local squabbles become less important and the looming threat of the two other factions appears on the horizon
* Feudal System:Each zone is divided into several subzones. Uniting all subzones is a single seat for the king (guarded by powerful elite beasts that must be first defeated) and a castle can be built.
* Each subzone contains lesser seats for vassal lords to take up and establish fiefs. 1 Kingdom per several fiefdoms = the Feudal System for a zone.
* While every vassal is not forced to ally with the King of that zone, it is in his best interest to do so. To support these we introduce emergent rules that gives advantages those allied with the
* A king who controls more than one zone is an emperor.
* Lords and Kings may have generals in their ranks (i.e. members who banded with the king/lord in initially forming the Kingdom or Fief). These will be given a detachment of soldiers to command. Or they may serve as generals and administrators in the Kings absence (when he's logged out).
* There will be sieges and skirmishes RTS style in the fight over resources and territory.
* of course there needs to be a system of vulnerability windows etc so that the game design require constant play to prevent enemies taking your city
* While there are many zones this is still a finite number, therefore promoting competition and infighting
* Camera view can switch from RPG view (similar to any MMO) to RTS view (where you control everything as a unit - including your own avatar).
* Adventurers have the power of several of the toughest RTS units. A
* Skills degrade slowly over time, so a player who chooses to be an adventurer, reaches a high level of proficiency and decides to become a Lord instead and command troops... Or his skill proven in RTS minigames (it will be sensible to add random RTS matches given that hte engine already supports it) attracts Kings and Lords who want to recruit him as a general. If he decides to take up the command position then he will slowly lose his skills while he spends his time sitting on a throne and commanding his troops instead. Generally it will be counterproductive to be a jack of all trades. His skills will degrade slowly over a finite period of time until he reaches the standard of a fresh level 30.
Example of a Typical Character (Mage)
Now, with this core ruleset lets take an example. Imagine a sorcerer has reached level 30 at which point he has learned some of the core skills for his class and say he decides to go along the adventurer/hero playstyle. However now its upto him to go out into the world and learn and study his art. Spells are spread across so many places. Distant neutral sorcerers who train you in different spells. Scrolls strewn across the world. etc. At any given time a sorcerer can only focus on a select few spells (Emergent Rule: because the skill system makes it impossible to be a jack of all trades. 8 strong spells are better than 30 weak ones).
The sorcerer has mastered frostbolt from his training and has a skill of 5673 with it. Now he continues to use frostbolt but it only increases very slowly (logarithmic curve). Since frost bolt is of the frost spell school he has also bolstered his general frost_school proficiency. He finds a sorcerer in some far off mountain and he finds out this guy can teach "Summon water elemental" ... This happens to also be a frsot school spell so he adds to his ranks and practises it. His first few elementals are weak, but as time passes this spell ability rises (thanks to his high Intellect and high Frost_School skill). Now he encounters a new spell in a scroll that teaches Death bolt. This is a necromancy spell. The mage is certainly clever enough (high enough Int and Delta_Int) to learn the spell, but it means he'd have to develop a whole new school of magic and also a whole new spell... Furthermore he'd need to support it in his gameplay and maintain it. He may decide it's not worth his investment... Or, if you're like me, he'd like the allure of the darker magic and decide to pick it up.
Some Additional Rules
Additional rules could create conflicts between spell schools. e.g. if you use dark magic you must abandon some types of magic -- e.g. demonology with fire is okay but not with frost. necromancy with frost is okay but not with fire or demonology. but Witchraft is okay with either necromancy or demonology. Rules like this promote emergence by favouring certain types of gameplay without putitng hard restrictions on any. It gives rise to player-driven choices. Also the fact that players can become extremely powerful lone warriors (without playing RTS style) will mean that these powerful heroes will be valued. People may start mercenary guilds where they provide services to guilds in times of war, for example.
Source/Credits: Xsistor from http://forums.create.msdn.com/forums/p/80723/488483.aspx