They argued that if the NPCs had been bandits they would just attack on sight.

Video game mindset is real.

I remember one of the first games I tried to run, when I was a young teenager. I described how there was a big rat in the first room of the ruins. The player was like "it's just there? Looking at me? Ok i shoo it away and check the doors..."

I was like, oh. Right. Duh. Normal people don't just kill every creature they see.