AI can provide the basic interpretation of the world universally for each NPC using the same neural preprocessor. Each NPC will then have it's own higher-level neural processing performed on it's own version of the world provided by the preprocessor from their own point of view.
This does mean that the preprocessor will be handling the world from each NPC's PoV, but this leaves much less processing for the NPC to do individually, and the lag can realistically be attributed to the level of IQ for each NPC by prioritising NPCs which have higher IQs naturally increasing their response times and levels of perception. Thus the NPCs become more realistically 'human' in their responsiveness.
Welcome to the 'real' world, Neo.
