Users can essentially eavesdrop on the conversations of many NPCs in Xenoblade Chronicles 3.
Some characters are simply talking about their day, while others provide important details regarding current quests or the state of their Colony. That makes listening in a frequent necessity.
Gamers can collect information from the conversations and use that to start a chat with the rest of the party. After obtaining the info, discussing what it means with the party is a must.
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Collecting NPC conversation information in Xenoblade Chronicles 3

Players gain the ability to listen to NPC conversations after reaching the third Chapter of the game. It isn't explained at first, but it comes through completing a standard quest in the story.
Eventually, NPCs will start to have an exclamation point above their heads if they have something to say. This indicates that they are amidst a conversation that may include vital information.
As users reach the Colony 4 Feronnis, they will speak to Ethel, who will provide the quest Helping Out. This has them talking to NPCs with the exclamation point to see if there's anything to be done around the Colony.
Pressing the ZR button when close enough will allow players to pay attention to the chatter going on. Just walk over and press the button to zoom in on the convo, and the words will appear above the NPCs' heads.

After that quest is done and the subsequent Hero Quest known as No Want of Courage, Ethel will join the party, and the ability to gather information from various NPC conversations in Xenoblade Chronicles 3 becomes available.
There is typically a reward for any conversation that gamers listen to. That reward could be a new quest, a small number of experience points, or information regarding an event about to take place.
How to discuss information in Xenoblade Chronicles 3

When the conversation has been heard, players will be able to discuss the contents of it with the rest of the party. This is optional but is the only way to gain the rewards and extra content from listening in.
The goal is to see what the other party members think about the information learned. Travel to any Rest Spot, and a new option can be selected that isn't usually there when information hasn't been gathered.
Choose the new option, which resembles a couple of chat bubbles. A cutscene will play, and all party members will talk about what they heard during the conversation.
When the cutscene ends, users will be able to act upon the information gathered from what the NPCs said. A small XP reward will be granted, a quest marker will pop up, or other unlockable features will be introduced.
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