Had to think about this one for a bit. I dunno if this is correct but for the purposes of this post "lore" is the hand-wavey "not individual characters but also not main plot" component of game writing.
To start with, I like game lore, but usually don't appreciate it as much as normal people because I tend to zone out while reading it more than I do with stuff that's directly related to plot. For this reason, I tend to think that lore is important to a game the same way chili pepper is important to a food: it's awesome to have, but the game should be edible on its own without it.
Aalso to me, a small emphasis on an okay plot is way, way better than a large emphasis on a terrible plot, but that's a story for another day.
In the
last Pokémon project I worked on that had its own story, the lore sort of grew on its own as the other elements of game were developed. The central point was "hurricane Armageddon" and then Team Aqua showed up and did some stuff, which led to some questions about the background such as "where are the Gym leaders," "what happened to Delaware," "is there a significance to this lighthouse? (there was supposed to be but we kinda gassed out before getting there)" and so on.
Everything in the next paragraph is subject to change because I'm genetically unable to commit to doing things.
In the current not-Pokémon thing I'm working on, lore is basically evolving in much the same way, although the guy I'm working on this with wants to put a greater focus on it this time around. This is supposed to be a much bigger game—also about Armageddon, sort of—but some of the current things we've though about are along the lines of "what happens to animals during catastrophe," "what are the consequences of (x) god doing (y)," "how do we justify these magical powers existing" . . . as well as some less serious things such as "what would a dophin do if it found a rocket launcher." There's a Google doc somewhere dedicated to brain-dumping plot stuff, and the lore is more or less the little details that spontaneously biogenesis out of nowhere and yet manage to make the world feel like it's consistent with itself.
Also,
this is kinda-sorta-tangentially related I guess?
I'd like to add that legendary-centric stories feel lackluster and overdone to me. That doesn't mean I find it bad for them to appear in the story; in fact my own game involves them quite extensively. They just are not the overall focus of the story.
At first I was like "nah" but then when I stopped to think about it, I kind of agree. It's not that they're inherently
bad, it's just that we've now seen so many of them—even in the actual games—that they don't pack the same wallop as they would have, eh, five years ago.