Reactive AI (as will be seen in Fable) is built to react accordingly to the player's actions, no matter how strange. What's cool about really robust reactive AI is that it can display some surprising behavior when unusual situations crop up. The problem with reactive AI is that it's hard to incorporate into a game that's supposed to have a script. How do you do a story in this type of environment? How can you ensure that the old lady in the cabin tells the player an important piece of information if he instead walks inside and impales her on a sword?