OP, this, this, 100 times this.
Currently, it sounds like they are settling for the worst option, which is to not implement backgrounds in dialogue at all. It's great and all that the system will acknowledge it for whatever checks, but if you can never talk about it, it feels less present/real/important which makes the character feel less present, real, and important.
The less ideal way to go about it would be less detail, keep it vague but still KEEP IT. If the problem of the Folk Hero tag in conversation is that it begs the question, "In what way are you a folk hero?" you could simply have the details not included but the outline there. You could say something like, "I'm kind of a big deal" / "I've handled this sort of rescue situation before" / "I do this all the time" and an NPC could reply, "Oh, I've heard of you, some hero, huh?" type of thing. Obviously with better writing. It's vague, but it's still in some small way acknowledged and leaves the player to fill in the rest.
Maybe they can check Baldur's Gate 1 and 2 ?
You have many options to define the personnality of your hero in dialogs, but there aren't a specific answer for every possibilities...
Having more realistic and voiced custom characters doesn't mean you need to add many pathes to the actual game's answers.
This is definitely not the less ideal way...
I also have to OP's feelings.
Custom characters need something different than just an "origin story".
I'll go further because I think that whatever you're playing an origin character or not, the character you choose need a main quest in which we are different.
I also have tons of fun playing DoS2 but this is why I think Origin characters are not that good actually... Without another layer in the player's story, it looks like you're playing the story of everyone and that's nott I want in a RPG.
I don't know if they planned something for BG3 but I really hope the character is going to have a unique background (and why not an "origin" custom background, one does not prevent the other)
