Greg Costikyan has posted on his blog a link to his article in Second Person, an MIT publication on games and player-avatar relationships. He makes the point about the liking of story and narrative, and the degree to which they are exclusive. I made a similar point a decade or so ago in an article qua conversation with Jason "loonyboi" Bergman.
Interaction and narrative are not completely exclusive, but one does reach a point where they can no longer intertwine to each other's benefit: enhancing one will come at the cost of the other.
I think story is more exclusive to good gameplay than Greg seems to, but I think that it's beside the point. Good games can give the impression of story far better than they tell actual story themselves, and those are the real confluences of game and story that people find so compelling.
The key is creating an environment where players will regard their interaction with the game as a story: create a context in which the player regards their interaction with a game as the continual writing of a biography of their character. If the player has that level of empathy with their avatar, and with the game world, then explicit story is unnecessary, and indeed can be harmful, the more explicit and required it is.
This sounds like advocating for "sandbox" games a la Raph Koster, but I'm not. Nothing is less conducive for a good conversation than inviting people to talk freely about whatever they want. Likewise, nothing will help a game world be dead and lifeless than concentrating solely on giving players lots of abilities and no goals.
Empathy and interest need a catalyst. For MMOs, that catalyst is the quest line. But one shouldn't mistake embedded story in a game world for the attempt to actually dictate the story of the world. It is the springboard for the players to write their own story. That's the real place where story and game intersect successfully and completely.