Yes procedurally generated content is random terrain generated on the fly. Arcanum used a map node system but you could walk from one node to the next on the world map over procedurally generated terrain. It was long and boring but you could do it. Given the way technology has advanced since then I think it'd be pretty easy to generate enemies and maybe even basic dungeons as well as random terrain.
By that logic, you diminish the realism of the game. The world theoretically is different every time you step out between settlements, instead of a defined world. It's like playing Diablo. And while I love that series and have no qualms with its dungeon/act world generator, I wouldn't want a similar mechanism back in Fallout. That has always been my least favorite part of the series, given that I played the originals post F3. And not everyone values the same aspects of the game world, but a fully-rendered post-apocalyptic world which has boundaries and definite landscape is high up on my list in enjoying modern Fallout games.