I've been playing Mount and Blade since it was a little shareware DirectX7 skirmisher, and have watched it grow and develop in huge ways in the hands of its tiny indie developer and enthusiastic modding scene.
The basic premise is actually very simple. Here's a large Pseudomedievaleuroland (Calradia) with a selection of feudal kingdoms in dynamic states of war and peace over their borders. You turn up and do whatever you can get away with. And this hasn't changed since the ancient first release, although the options have grown with each iteration, helped along by mods like the Native Expansion, and the new version/sequelish (I refuse to use the (oxy)moronic term 'Stand Alone Expansion*), Warband.
When I say you do what you want, I mean it. This is a game where you really have to make your own story happen, there's no overarching plot beyond the contant struggle for supremacy in Calradia, but your story will grow dynamically from your interactions with the vast number of NPCs living in the same circumstances.
You want to be a merchant, and trade your way around the world, making your fortune? Do it, you'll need some strong lads at your back though, the place is swarming with bandits and the nobility are not above hitting trade caravans when they're on the warpath either.
Fancy being a professional tourney fighter a-la A Knight's Tale? One hell of a way to make a living, do well and you'll go far, fail and you'll lose money very quickly. And you still don't want to travel alone, outside the arena, people are playing for keeps.
Me, I do a bit of this, a bit of that, but mostly, in my current game, I've sided with one of the kingdoms, and pledged my sword to its Queen (they're all kings in Vanilla, but Native Expansion makes it a bit more interesting), and I fight her enemies, chum up to her knights and nobles, attend her banquets (when I have time, between managing my castles and villages and building and training my army)... you can see the scope of the game? And that's just on the map screen and a couple of menus.
Where it really shines though, is in combat. The graphics are not the very best that any game has ever had, but they do the job, and Warband improved them markedly over the original, but the sheer physicality of the movement and fighting makes for one of the most immersive experiences available on the PC.
Fighting with a melee weapon involves twitching the mouse in the direction you want to -depending on your configuration- strike, or pull back, holding the mouse button and then releasing it to attack. It can take a bit of getting used to but I've never experienced sword fighting in a computer game that felt anywhere near so immediate and visceral. Archery is also a hold and release affair, which is fairly common these days anyway.
One does not fight alone though (unless it's all gone wrong) and you can have a warband containing named NPC companions, hired mercenaries and peasents that you recruit and train yourself, and you have a small range of orders that can be given by keyboard shortcuts to allow some (convincingly) rudimentary tactics.
The game is not perfect. It can get repetative, there are some AI problems (when aren't there) and it's impossible to die -you get taken prisoner, lose your army and most of your stuff and have to start over from where you are arbitrarily dropped off by your captors- but as a rather complete free-play experience, I've not yet seen its match.
*I've only ever encountered one game with actual stand alone expansions, and that was Dawn of War, where the addons contained two armies each and could be played independantly, but could also be combined to give the full range.