In Champions Online, one of the locations you end up visiting is Snake Gulch. It's an amusement park staffed by robotic cowboys that have gone crazy and turned on the visitors. There seem to be a few tourists hanging out in the parking lot anyway, although it's not clear how they got there. The only road in or out of Snake Gulch leads directly into the terrorist missile base next door. To the west of the amusement park is a post-apocalyptic wasteland / nuke testing grounds, which is next to the haunted Old West ghost town. While visiting Snake Gulch, you'll be doing missions like hunting down a deadbeat cowboy robot who somehow owes - and I'm not making this up - alimony to his robotic ex-wife. You'll also be trying to stop robotic ranch hands from dynamiting the town under the direction of the "insane" cowboy robot preacher. These deeds do not exactly speak of heroic super-legend.
Thus Champions Online manages to have a setting which is completely ludicrous even by comic book standards. Did you sign up to prowl the city streets as a dark protector, delivering brutal justice to the criminal underbelly of the city? Or maybe you're more of a Superman type, altruistically helping those in need? Well, I hope you left room in your schedule for fighting (and sometimes getting your ass kicked by) foam-finger wielding fanboys, singing cowboy robots, a super villain who uses ping-pong ball guns, spectral ghost cowboys, and Canadian Velociraptors.
You could excuse this as the game just cramming all the classic comic book themes into a single setting, but even as classic pulp adventure the thing falls flat. The missions are often overly absurd and are peppered with fourth-wall breaking MMO humor and whoopie-cushion level comedy. The now-defunct Hellgate: London had the same problem. The entire setting was played off as a joke, and the thing could never build any sense of adventure or atmosphere because it was too busy mugging for cheap laughs and using your character as the straight man in a farce on videogame tropes.
I can see what led them to make this mistake. Most people click through the quests without reading them. Instead of trying to make quests more worthy of reading, designers seem to have shrugged and stopped taking their job as storytellers seriously. I think this is a short-sighted mistake, and does more harm to the game than it might seem at first glance. While players don't always read the quests except to find out where to go and who to kill, they do like to inhabit a cool world all the same.
Undermining the setting ends up undermining the players as well. A lot of people are there to live out their heroic fantasies. They see the X-Men or Spiderman and think how exciting it would be to live that life. Batman in Gotham is an iconic figure with incredible appeal. But if you put Batman in a comedy setting he becomes himself a joke. It doesn't matter what he says or does, if he's hanging in the zany world of Austin Powers then he's no longer the Dark Knight, but instead an obsessive and overly serious nutjob ranting about justice and dead parents. These are roleplaying games, and people don't usually sign up to roleplay as a buffoon. Even for those who are there just for the gameplay and PvP, it's generally a lot nicer to do those things against a dramatic backdrop than to feel like you've got a bit part in Meet the Spartans.
It's true that players will themselves make fun of the game world. They will create silly characters with outlandish concepts and cringe-inducing puns for names. (I'm as guilty as anyone of this.) They're having fun subverting the setting, which is a perfectly enjoyable thing to do. But they can't do that if the world is already silly. Subverting a farce setting is like trying to humiliate a clown. The writers are having fun at the expense of the player instead of the other way around.
I know writing good missions can be challenging. The conventional wisdom is that they can't be too complex, and that they have to deliver their narrative in bite-sized chunks of one or two paragraphs at most. They're generally not voice acted, and since other people might be interacting with the NPC at the same time the NPC can't do much in the way of emoting. Cutscenes are usually out of the question both for reasons of budget and practicality. So in the end, the would-be storyteller has to do their job with nothing but text.
I'm one of those gamers who will be glad to read the text when the developers take the time to write and polish it. I think developers are underestimating our appetite for fiction when they assume nobody will read the quests. But even if I'm some sort of aberration and most gamers really care nothing for what the quest-givers have to say, I still think it would be better to give us the classic bland and simple boilerplate quest text than to give up and put Groucho glasses on the world and the story.