[crq-yml]

CD and other formats create trade-offs vs MIDI event sequences - it's a simple playback method offering a lot of fidelity but in exchange, you're tied to having either "one track at a time and the CD spins up in between" (Redbook CD), cueing uncompressed sampled tracks(feasible but memory intensive) or cueing one or more lossy-compressed streams(which added performance or hardware-specific considerations at the time, and in many formats, also limits your ability to seek to a particular point during playback or do fine-grained alterations with DSP). So as a dynamic music system it tends to lend itself to brief "stings" like the Half-Life 1 soundtrack, or simple explore/combat loops that crossfade or overlay on each other. Tempo and key changes have been off the table, at least up until recently(and even then, it really impacts sound quality). DJ software offers the best examples of what can be done when combining prerecorded material live and there are some characteristic things about how DJs perform transitions and mashups which are musically compelling but won't work everywhere for all material.

MIDI isn't really that much better, though - it's a compatibility-centric protocol, so it doesn't get at the heart of the issue with dynamic audio of "how do I coordinate this". All it is responsible for is an abstract "channel, patch number, event" system, leaving the details involved in coordinating multiple MIDI sequences and triggering appropriate sounds to be worked out in implementation. An implementation that does everything a DAW does with MIDI sequences has to also implement all the DSP effects and configuration surfaces, which is out of scope for most projects, although FMOD does enable something close to that.

I think the best approach for exploring dynamic and interactive right now is really to make use of systems that allow for live coding - Pure Data, Supercollider, etc. These untangle the principal assumptions of "either audio tracks or event sequences" and allow choice, making it more straightforward to coordinate everything centrally, do some synthesis or processing, some sequencing, adopt novel methods of notation. The downside is that these are big runtimes with a lot of deployment footprint, so they aren't something that people just drop into game engines.