A classic RPG quest setup: You need to get the Knickknack of Awesome, which is in the hands of King Bob. In exchange for the Knickknack, Bob wants you to rescue Princess Nancy from another kingdom. Because he'd rather not start a war, he'd prefer if you didn't kill a bunch of prison guards in the process. So we have a quest with loot, risk, travel, and optional goals. If this were an old-school RPG like Fallout or Planescape Torment, then we'd probably have many, many ways we could approach this challenge:
1) Sneak or scam your way into prison and free Nancy, claim the knickknack.
2) Murder your way into prison and free Nancy, claim the knickknack.
3) Swipe the knickknack outright.
4) Kill King Bob, then take the knickknack.
5) Get Nancy killed (or kill her yourself) and then end up having to obtain the knickknack some other way.
6) Kill Bob, take the knickknack, but later rescue Nancy anyway.
7) Kill Bob, take the knickknack, enter prison, kill Nancy.
8) Free Nancy on your own, then meet Bob for the first time and get the knickknack.
9) Bribe Bob for the knickknack with a huge sum of money.
That's a lot of options, and players can have a lot of fun running through the game again and again, experimenting with different actions and seeing what the NPC's have to say. Roleplayers will approach the quest by asking themselves, "What would my character do?" Other players will just do whatever sounds like fun. "Stealth mission? Awesome!" And others will just look for whatever route gives them the greatest mechanical advantage. "If I wipe out the guards, I can make a fortune looting them!" The game is able to appeal to a lot of different play styles and moods.
But if we were talking about a more modern RPG like Oblivion or Fallout 3, then this quest is likely going to be a lot less flexible. On the back of the box the game might brag about how you'll have all kinds of choices to solve problems the way you want, but in the end your options will boil down to:
1) Sneak into prison and free Nancy, claim the knickknack.
2) Murder your way into prison, free Nancy, claim the knickknack.
Maybe the two routes will have a good /evil bent to them, and maybe you'll sometimes get a third option, but in general the days of inventing our own solutions to freeform quests are gone. Usually the game world will be "hardened" against the player by making certain NPCs (like Bob and Nancy) invincible. Some doors, no matter how flimsy, will be indestructible and have an unpickable lock. And Nancy won't appear in the prison cell until Bob tells you to rescue her. Now the game is less about inventing your own solutions to problems and more about just doing what you're told.
While the newer games supposedly evolved from the older ones, they have very little in common at this point. Usually when a genre changes radically fans will blame it on the designers "dumbing down" the game for a wider audience. But in this case I think the culprit is technological advance: I think games have been simplified because of voice acting. If the game is all in text, then King Bob can have dozens - maybe even hundreds - of different lines of dialog to respond to all of the possible player actions. If the game is fully voice acted, then this is completely infeasible. Voice acting might not be the only reason games are offering less freedom, but I think it's a major culprit. Going back twelve years or so you can see the trend: The more voices we get the more linear games get, because having both at once is too danged expensive.