NPC in the gaming world stands for Non-Playing Character.
In most games, even MMOGs, most of the characters you see on the screen are not being manipulated by other human beings. Rather, they are carefully crafted segments of computer code that provide ambiance in the game environment, interact with a player’s avatar, contribute to the narrative of the story, or even assist the player in various parts of the game. In multi-player games, they are usually distinguished from other players in some way, although that distinction may not be obvious to new players at first.
Hostile NPCs are often called “monsters” or “mobs”.
Developing sophisticated NPCs is one of the top challenges in game development. NPCs can often have complicated movement patterns and must be designed to interact with a rich game environment as well as – potentially – multiple players. As such, this is an interesting field for artificial intelligence theorists and programmers. But even people lacking in technical computing backgrounds can benefit from studying how NPCs act in order to become better players as well as understand the limits of what computers can do, for now.