I’ve been mulling over this the past few years, having finally kicked the WoW habit in the second year of Shadowlands (approaching ~3 years now)..

..but how often are quests/missions/objectives etc. just a combination of go to x, collect x of y, kill x of y? At a certain point, all of these become generic - right?

There's a whole different angle to game fun which is exploring game mechanics and the complexity that emerges from their combinations and interaction with the game space and the behaviour of independent game entities.

For example (and highly simplified), in Terraria the player has to balance the location of resources, their search and extraction of them, the actual movement, location and needs of the game monsters and NPCs, and their own progression up the "research ladder" (only in Terraria the "research ladder" is implicit and based on which resources have you managed to get your hands on and what have you built with them).

Whilst some of the fun in that game is in exploring a procedurally generated world, the drive to do so and the main fun in the game is to solve the complex problems that emerge from the interaction of those things: you explore to find resources that let you make equipment that allows you to explore more dangerous or harder to reach places to find more complex resources to make more complex equipment and so on and meanwhile the more advanced equipment also lets you do no stuff (IMHO, just merelly "shovel +1 level" equipment improvements are nowhere as satisfying as getting access to new kinds of stuff that let you do new stuff).

Examine games like for example Factorio, Minecraft or Rimworld and you find the same kind of global game loop: do stuff to get stuff to be able do more difficult stuff to get more advanced stuff and so on and all the while the complexity of your choices increases because the combination of options you have goes up as, often, also does the complexity of the World you now have de facto access to.

The AAA world however went down the path of story-like games which have one core linear story (the main quest) and then a bunch of mini-stories (side quests) and were game progression comes from advancing the core story and gaining levels (which themselves are generally just the mathematical result of doing stuff and advancing the core store and doing side stories) that let you do the same things only better and maybe a few news things, ultimatelly to help story progression. Stories "officially" drive the player's exploration (though some players also self driven to just explore just because of liking to explore) and it seems to be impossible to get good stories working well in procedurally generated worlds (as No Man's Sky has proven, IMHO). There is often some amount of the same mechanics as I describe above for open world indie games, but they're not the core of the game and what drives the player.

And yeah, if your game is story driven and you can't procedurally generate the game space with good stories, you're going to hit limits in the size of the thing, either on the size of the game space that has to be handcrafted to work well with the stories or in the amount of stories being insufficient for the game space leading to lots of boring game space that feels empty like it's just filler.

A building out rather than filling in approach?

Definitely one of the reasons I absolutely love the original Borderlands. Large world, but broken into a lot smaller chunks/maps. More games doing stuff like that would be absolutely perfect.