For decades, true interactive fiction--an application in which characters' responses to a player's input are determined algorithmically rather than via prescripted sequences, and in which valid stories emerge regardless of player action--has been a holy grail for AI researchers, digital artists, and game developers alike.
Most attempts to solve the problem have been "top down," that is, attempting to handle all sorts of stories, all sorts of personalities, and all sorts of potential actions. The results have generally been never more than mildly interesting.
Andy Stern and Michael Mateas, however, chose to try to solve a specific problem, rather than the general one. They chose a story with one setting (an apartment), two NPCs (a husband and wife), one basic conflict (their marriage is on the rocks), and a limited time frame (you are a friend of the family, visiting them over the course of an evening). By narrowing the focus this way, they were actually to solve the problem. Not, to be sure, in a way that solves the general problem--but in a way that makes of Façade the first really interesting work of true interative fiction.
That is to say, the characters respond believably almost regardless of what you as the player do; a story emerges over the course of play; outcomes can vary; and yet the result is a coherent narrative whole.
This is not a game in the conventional sense; there are no explicit player objectives, nor any quantifiable goal (which Salen and Zimmerman at least believe a key definer of "the game"). Rather, "interactive drama" is a better description; Façade feels something like a one-act play.
Anyone interested in the nature of narrative in games (and interactive media more generally) should give Façade a spin.