Have you ever been stuck in a busy mall at Christmas or surrounded by a large crowd during a sporting event? Perhaps you were shopping among the bazaars of heavily fragrant spice markets? Now, imagine that all of the people in this environment disappeared. How would this change the mood? Quite significantly, I would imagine. Regardless of how big or how small a crowd of people is within an environment, they definitely add to the overall atmosphere.
Some great examples of crowds in games include the Assassin's Creed series:
Crowds can include both interactive NPCs and those that simply just wander around, minding their own business. In some cases, like in Assassin's Creed, members of the crowd will play an important role such as requiring you to protect them, offering you protection, or even requiring your resources...