You are missing a lot of elements of this because those elements have never appeared in a computer game before.
See, I don't think I am; I read your description...perhaps you haven't done such a great job, if my responses are "missing a lot".
I'm pretty sure people would want to play actual multiplayer games much more than single player games where other people are playing them at the same time.
See, you keep saying "actual multiplayer games", and all it sounds like is the MMOs we have now, but with factions and cooperation.
The problem is that, if every "monster" in the game, every enemy, was another player...what if nobody's logged on? Who do you fight?
What if people are logged on, but don't want to organize enough to do a mission into enemy territory?
What does conquest look like? What if one side has taken over completely? Won't the game get boring?
I just think you're expecting too much of gamers, that people will cooperate enough to have a real faction, that they'll want to, and that enough of them won't be complete jerk-wads about it, killing off their own team with friendly fire because they think it's funny...or something. In my experience, gamers just plain aren't that mature.
You have a good idea...but I don't think it would survive in the real world.
That is the only reason that you don't have actual multiplayer games, they would never allow someone who was capable of making one into their clown show.
Tell me, have you actually worked in the game industry...? Cuz I have--as a software/hardware tester, cut-scene scripter, and level designer, including for big names like Disney--and I gotta tell ya...what you're describing doesn't resemble my experiences at all.
Granted, I was mostly just an artist, but it's not like I didn't hang with the coders, go to weekly team meetings, etc...are you sure this isn't just sour grapes on your part, rather than an accurate picture of the game industry?