Besides, LLMs struggle with retaining contextual information for long and they're pretty dang resource hungry. Expect a game with LLM-driven dialogue to reserve several gigs of VRAM and a fair chunk of GPU processing power solely for that.
And then you still get characters who hallucinate plot points or suddenly speak gibberish.
Yes. This mainly happens when everyone has different expectations without realizing it. That's why is important to talk about these things in advance so you don't end up with a GM who thinks it's obvious that PCs can die at any time due any reason and a player who thinks it's obvious that they won't.