In this post, I elaborate a method of using reaction rolls and rumour tables to generate a dynamic background to the world as PCs adventure through it. I've been told that I'm very good at creating the feeling of a "living world", and this is one of several techniques I use to do it.
The method is fairly simple: Take a rumour table with a bunch of rumours and roll on a reaction table for every rumour your PCs haven't followed up on. Use the result of the reaction roll to determine how the situation develops and update the rumour appropriately. Remember, some rumours should be false or misleading, and a hostile result should make them more so, not less.
e.g. Rumour: Blue lights and strange noises seen around abandoned Castle Windwell (true; a ghost is causing it)
Reaction Roll Result:
12: Julie the Amazing found and reconsecrated the ghost's body while the PCs were busy with something else. She's now got a ghost-blessing and is roaming around looking for more adventure.
9-11: The ghost has been quiet lately. A local shepherd snuck in to explore and saw a golden chalice, but got scared and ran off before he could grab it.
6-8: No change
3-5: The baron sent out some men-at-arms to investigate, but they never came back. (The ghost has killed them and reanimated them as zombies).
2: Julie the Amazing went out to deal with the ghost, but she came back possessed with ghost powers, and has been roaming around town causing trouble when people least expect it.
You just keep on doing this after each adventure. For extra "verisimilitude" recycle names and problems across each local area, so you get the sense of who the movers and shakers are in that area. If Julie the Amazing pops up in three different rumours each covering some of her recent exploits, you get the sense that she's an important person locally, both because of her deeds and the interest others show in them.
The nice thing about this method is that because of the bell curve, you'll have slow developments and changes over time that feel like a world in motion happening in the background of the PCs' adventures. This is a pretty simple technique, but that's it's advantage - it's fast and easy and doesn't require a ton of reflection to work.