Hey, Shawtay! I need to reserach a little bit in order to try answering this. Couldn't find anything relating to NPC Mud per si, but found about the references.
As you may know, Tibia was created as a college project by the 4 GOD's and it was meant to be a multi-user dungeon RPG game (therefore M.U.D.)
The evolution to an MMO was developed with the growing popularity of the internet.
After looking for a while, I found this link explaining in details what exactly is a M.U.D., but, in resume:
1) Is a multi-user virtual world described entirely in text;
2) combines elements of role-playing games, hack and slash, interactive fiction, and online chat;
3) were a precursor of the MMORPG's;
4) they were not necessarily games, being used for purposes such as distance education or virtual conferences.
Hope this could help you <3