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They talk yes but there's next to no one in the cities.
It's just an Elder Scrolls thing, you won't see loads of no name NPCs that are essentially just graphical objects like in Assasin's creed games. Different style of game. (Personally I prefer Elder Scroll's style)
PS: They also come out at certain times of day, for example you'll see a lot in the morning as everyone heads out to work and what not.