I don't understand what Radiant Story System is doing?

Is it just there to choose which quests are given to the player?

Or is it Radiant AI with a new name?

So far as I can tell, the Radiant Story system will serve to generate at least some (hopefully at most some) of the side quests you can undertake. Elements of the quests will be tailored to your play style, including using dungeons that you have rarely or never visited. I see it as a flavor/filler machine, with good potential, but I hope that there are at least the level of unique and interesting side quests that Oblivion had, Morrowind's level would be even better.

So its only for the random generated quests?

I think its bigger than that with the quest generating thing being one part of it. It seems to put forward that your characters actions will have a palpable effect on all levels of the game even to the way people interact with you. in the magazine it gave examples of a child returning stuff you dropped or 2 guys fighting over an axe you just left on the ground. Neither of these are particularly quest related.

I just hope that its not just Hype as I recall they were touting the Radiant AI system to be equally as revolutionary in oblivion with NPCs reacting to everything you did. it led to speculation on whether you could starve a town to death by stealing all the food or if it forces migration to other towns etc. In the end Radiant AI had to be severely reigned in as it caused all sorts of problems with game world stability and balance. In end all we got were NPCs who moved around with daily routines.

Lets hope this new system lives up to the hype!

Think of it as something equal to Red Dead's random events system.

Or almost similar to the system in Daggerfall, that would be something.

Morrowinds quests were inferior compared to Oblivions.

Todd goes on to tell us that the game watches everything we do including skills we have, places we have been, who we have killed and what weapons we have and accordlingly develops our own personal story which is unique to how we play and what we do.
One example he uses is that if you are a mage and good using magika you might be challenged to a dual but if you are not, you will never encounter that quest.

On top of level scaling, they'll add skill scaling so that your ego won't be hurt by opponents stronger than you.

Randomising some sidequest locations and adding some random filler quests sounds OK to me.

Radiant Story sounds a lot like an idea I'd come up with in my head a ways back about having a sort of "virtual game master" in an RPG video game. All RPG games already by default have a sort of "virtual GM" in the sense that the game mechanics are all handled automatically, but one thing that a human GM can do and most game do not is tailoring the experience for the player(s) and having a world that reacts realistically to player actions. The only thing that bothers me is that some of it sounds a bit "too good to be true"-I'm thinking it'll end up being a system with a lot of potential but most of it will be untapped. Ideally, however this will be something that modders will be able to play around with for some exciting results however.

It makes a lot of sense. If you're the archmage, nobody should be asking you to, say, sneak into somebody's house and steal something, but nobody should be asking a thief to go toe-to-toe with a golem. Side quests tailored to your character would be great - preferably a mix of truly psuedorandom quests (Go to X and (kill|retrieve|find) Y Zs) and a large amount of regular sidequests that are assigned to different people (Like Oblivion, or Morrowind, sidequests, except not with a set questgiver or a set time to do them)