I always read Narrative Legos as Levine's frustration with the limitations of storytelling in games like System Shock 2/Bioshock (his babies). It seemed like he wanted a way for stories to be able to grow naturally based on choices made (somewhat like BG3, but more organic in nature, happening without having to necessarily be coded as such). Although that's probably because I'm more interested in the writing games side than programming games side, so my thoughts went to what it meant for writing.

However, I can see what you mean about how that can also impact the cost of development because now you can add more narrative to the game without it having to be such a separate, stand-alone piece (like DLC and Expansion Packs of yesteryear). So, interesting perspective, thank you for sharing it.