Imho any player character state in a game should only change due to their interaction with the game. "Dynamic" does not mean it needs to happen without any the player even doing anything, or even playing the game.
Yup! However, you are missing this part.
You've pledged yourself to your lord.
You went out and completed many missions for said lord.
You've gained much respect and fame from said missions.
You've reached your goal, the people love you.
You head to the bar/pub and reap the rewards for your labors.
You keep going back the the bar/pub each day there after. After a while the rewards start to lessen and not as many people listen to your tales of your achievements. However, you continue to go back to the bar/pub each day telling the same tales and expecting to get free drinks and other rewards.
The people start to tire of you but you don't notice.
Suddenly you are starting to pay for your own drinks and the other rewards are far and few between. Your achievements are being overshadowed by younger heroes.
The ladies no longer smile at you the same way. Its a sad smile, but you don't notice.
The barkeep no longer lets you run a tab.
Now you are paying for all of your drinks, when you can afford it, and the people ignore you. Your stories got boring quite some time ago. You are now just background noise.
Now you are the story for any new comer into the bar. "Him? I don't know, he's always here. I have no idea what he is going on about. Just an old fool."
You sat on your laurels and let events go by. You did nothing to maintain your status, other than crow about past achievements.
There is no better way to scare off people again from coming back to the game after extended breaks than to present them with some of their earnings and achievements simply erased.
While you were gone, the universe keep moving, leaving you behind.
I had that happen a bit ago. I sorted it out.
'Hi guys! I'm back!'
"Who are you?"
'Let me show you!'