They are stars in space, quite literally they are isolated pockets hovering in a vacuum. This isn't a busy city, it's space, the only things that happen in space are bad guys fly up and try to kill you, thus deep space encounters. Systems have planets and life and are busy with all that, but space is just empty.
You could have 10,000 ships in one system and unless they were orbiting the same world the only way you'd know more than a couple were there was from your scanners.
As far as story lines go, the episodes are awesome story lines. Yes the objectives seem like all kill five bad guys to free the planet. But how are you not going to have that in a game? They could choose not to post how many bad guys there are to kill in the objectives window but people like to know how far along they are. Just make sure and read the story parts of the missions, not just the objective window.
Yeah, what we see in sector space is a whole lot busier than we would really see.
Collecting items and figure out how to use them to solve a problem?
Investigations where you are not just handed the answer in return for executing five baddies?
Some skill based trials where you accurately fly / shoot / run a course (maybe mini games on the holodeck?)
Vocalised captains log entries or 'captains thoughts' as you go along in each mission ?
Avoid the baddies components to missions that maybe encourage you to scan/explore the planet to find the route through to the goal..choose where to beam down not just at the start of the 'route' ?
Some pre-rendered cut scenes to tie things together ?
Have a look at GTA .. again it's a big onging story that you dip in and out of while exploring.. you always have a bigger story with cut scenes to go back to when you're done shooting people, finding vehicles to mess around with, aircraft to fly, stunts to complete for credit etc etc.. that is a model for how STO could exist.. BIG missions that take weeks to complete because there are smaller fun things to do in between each mission goal that pushes the story along.
What you are talking/asking about/for is the MMORPG dilemma. Using puzzles an an example, a developer can spend a large amoutn of time/resources to create an idea puzzle. It would be fun for all players to do, Not too hard nor unsolvabe, and play right into the story line. But the probably is that once the puzzle is solved, it's solved. A player playing through it again doesn't find it a challenge as he know the secret. Or they will players who will read the guides about the puzzle that other player will write. Bottom line like is not replayability for a large investment of resources. Not a wise investment for an MMORPG. And similarly for branching mission. Branching missions require 2X or more development time for 1X of playtime. Here the devs are running into the issue of a finite amount of resources.
Unlike a normal game title which has an (eventual) ending time, an MMORPG is an ongoing development effort. It's an ongoing balancing act. Spending too much time on new stuff, means that current players get burnout of the current. Not spending enough development time likely means mediocre, lackluster content. The buld of the mechanics we see in MMORPGs are there because they work in terms of high return (play value) for the time spent on creating them.