The Witcher 3: Wild Hunt includes a complex open world full of systemic elements that act independently of the player. In order for that to happen, AI needs to be definitely advanced. Community Manager "Evil" Chris Priestly described some interesting scenarios on the game's official forums.

Monsters can be lured into villages or towns, but it is hard. Most creatures are smart enough to know they are in danger the more humans are around, so they avoid large settlements, towns & cities. Still, it can be done. However, townsfolk don't have to stand there and get killed. They are also smart enough to fight back or, more likely, run indoors and hide.

Animals and monsters can attack each other. And random NPCs can and will attack or be attacked by monsters/creatures depending on the situation. One lone farmer walking down the road could be set upon by 2 - 3 wolves. He would likely try to run, but would probably become wolf dinner. A squad from the army would likely not get attacked in the same situation as the wolves are too smart to throw away their lives. And there is also the day/night cycle and location to be considered. Some creatures are more powerful at night or drowners are more likely near water, etc. Overall though, this is a living world and it interacts with itself as well as with you.

Some users have also complained that the decapitations and finishers seen in past trailers aren't exactly physically accurate or realistic. Priestly's response was quite clear.

Realism eh? Like shooting fire from your hands, undead spirits and giant lionbird monsters that fly? I know that is kind of a pissy argument because there is some "willing suspension of disbelief" that goes into a fantasy game and some elements of reality help keep things grounded. However, there is also artistic license and we like taking a few liberties for the sake of good visuals.

Heads will roll.

The way heads fly seemed to be a peculiar topic of contention, but Priestly stood his ground:

Sure, I get that. It is not 100% physics accurate. It is a visual done for the sake of looking cool rather than accurate. Not everyone will enjoy it, but that is how it is.

Ultimately, it's called artistic license. I'm pretty sure developers making a fantasy game are entitled to it:

Again, and for the last time, the head flies because we like that it flies.

As a matter of fact, I like that it flies too. Physics be damned.