It was a lively, bustling major city... of about 12 people and 1 chicken.

https://startrek.website/post/2744361

It was a lively, bustling major city... of about 12 people and 1 chicken. - Star Trek: Website

I always assumed that NPCs represented mroe than one actual citizen, because otherwise the world would become far to cluttered, and teh system requirements far to high to manage literally thousands of NPCs that exist for no reason.
Yeah, from a historical perspective it makes sense to cut down. Maybe not really as of Skyrim and later games, though. GTA games, including ones almost a decade older than Skyrim, manage to have a fairly reasonably high "population" of NPCs.

GTA and Skyrim are very different games and therefore need a different approach. GTA has some key characters which drive the story. The other NPCs are ‘set dressing’: fairly simple, nothing interesting to say, don’t have a home. They are just spawned in where needed. Skyrim has a different approach. Except soldiers/guards pretty much every NPC has a ‘life’: they have daily routines, unique voice lines, a place to sleep and go there every night - except they are on a quest themselves.

GTA and Skyrim go for a different feeling, which is why they need different solutions.