Aside from a really short paragraph on Wikipedia (which does feature the informative fact that the entire profession stems from a 2006 job listing by a THQ employee), there's so little information about what a Narrative Designer does (as opposed to a Game Writer), leaving a lot to the interpretation of whoever ends up writing more recent job descriptions—which vary vastly from one job to the next.
So I've looked into this quite a bit since I myself transitioned to game development and was looking for an appropriate job title. Here are a few things I've discovered.
Though you might see this as a job title every now and then, this should let you know in advance that the studio may not have a precise idea of what they're looking for from the person they want to develop their base idea. "Story Writer" is a more apropos title, and that relates to what I just said: that a Project Lead will likely have a general story direction that they've already thought up, but need an actual writer to make it a reality in the form of a strong narrative, fleshed out characters, and worldbuilding.
There's No Such Thing As a "Game Writer"
That's already a heartbreaker and / or disqualifier for a lot of writers new to game dev, because they envisioned that a game would be built from their vision, and nobody else's. However, this becomes a type of Darwinism, because game development by nature is an endless series of compromises on every facet of production, so this requirement sorts those who can adjust to collaboration, and those who should rather be writing novels than developing games.
There Is Such Thing As a "Game Designer," and It's a Pretty Important RoleBut it's not synonymous with Narrative Designer (though they often get confused for the same job, or doubled together by one person—especially on indie teams). The role of Game Designer also gets extremely befuddled, because to some studios, this is indeed a concept creator, and to others, this is a programmer who has a strong foundation in mathematics (and for some reason, you'll find a lot of this in Australia).
Game Designers do conceptualize the base idea of what the game will be, and how that will correlate to a fun, commercially viable experience that the super-competitive gaming market is lacking. This involves brainstorming mechanics, visual style, first-person vs. third-person, who the target audience will be, the unique selling proposition that separates it from other games, and packaging all that (plus other) information together in a Game Design Document.
Story and characters are just one small area of that, and depending on the scale of the game, typically need someone else to explore it further.
The Harmonious Relationship Between Story Writing and Game DesignThis is where a Narrative Designer comes in. You are taking ownership of whatever's been conjured up thus far, recording it meticulously in your notepad or laptop, and developing it into a linear / nonlinear narrative that also will translate as a gripping story which will make your game unique (and quality of story doesn't get talked about enough, but that's so big a topic that it's another post).
You will make connections everywhere: characters -> character races, character races -> places, places -> mythology, mythology -> character motivations, character motivations -> characters, and that's just one cycle of an endless amount that need to be registered in your mind (and notes). Moreover, all of them must make sense in the grand arc of the story, to establish an overall consistency, and this isn't easy once data gets too large to memorize, nor is it something you should be doing passively while writing for several other projects concurrently.
Dialogue TreesHaving networked with several writers (or Leads doubling as writers) over the last year on the indie scene, what surprises me more than anything else is that no one has actually ever designed a dialogue tree (let alone one with variables / programming that affect other in-game events). This is also another topic that can be spun off (fitting into the theme of quality, since the kind of dialogue you write needs to reflect completely with who the target audience for the game will be—something that should be made abundantly clear in the Game Design Document), but the short of it is that this is one of the things that separates narrative design from prose writing.
A Narrative Designer is an interactive storyteller (who needs to take into account user input), and each interactive story is far more difficult to write than it looks—having a long list of prerequisites based on what's been established thus far, and postrequisites (which isn't a word, but maybe I can invent it the same way the THQ guy invented the Narrative Designer job?) affecting where the story will go from there. You're branching into several different directions, and need to write an interesting pathway for each one, all-the-while keeping in mind that a lot of what you're writing may not be consumed by the player (since they can only go on one path), and this is a whole science on how to balance pertinent information across several different nodes on your dialogue tree.
Remember: every gamer is going on their own unique adventure in your game, and all of those stories need to resonate.
Details MatterNarrative design can be particularly tedious. Whereas with writing prose, you can expand the breadth of your universe and your protagonist's emotions from a single line, like, "She shivered as the warm wind blew against her, reminding Ariel how close her home planet was to the sun, and how she missed it so." With narrative design, you are writing the basis of that same information under the idea that a lot of it will need to be told (or more accurately, shown) visually.
In the process of maintaining a narrative document or game bible, every facet of the world needs to be recorded and overexplored, since it has implications everywhere. Your character doesn't just wear a trench coat, like you'd describe in a novella. It needs to have facial features, hair, a top, a bottom, footwear, etc. because that becomes the main reference point for the concept artists, whose work then influence the character sculptors, and it all stems with being able to describe the vision you (or whoever owns that story detail) have with words as cleanly and precisely as possible. Whether your character has a limp from a boating accident affects the Animator on your team. If her hair turns from red to yellow to blue to purple depending on the day / night cycle, though that sounds like a unique character appeal as a Story Writer, is quite a significant programming task for the Development Team that may have implications on whatever other scripts are attached to that character's hair.
The Narrative Designer needs to keep a handle on all these details to ensure that the story is translatable to development, and makes sense in the grand scheme of things. Again, this is where compromise should become second nature, because you need to become very comfortable with cutting or amending your own ideas to improve the workflow of the rest of the team, and this should inspire your teammates to do the same. You have to be the diplomat to keep the development cycle moving.
There's obviously a lot more to narrative design than this, but a good introductory post that I'll likely be expanding on later. I should mention though that although some of what's said above may deter a writer from pursuing narrative design as a profession, it's more to clarify what the role is to better prepare before taking on a project. Being "center-brained" is a tough place to be because both the left side (writing stories, drawing art, making music, etc.) and the right (project management, programming, mathematics / physics, etc.) will pull you in all sorts of directions when trying to find your ideal role in game development, and it becomes all-the-more confusing (and I'm mentoring a couple of beginners right now who are having just this dilemma). But if story development + management are the conjunction of your strengths, then narrative design is exactly where you need to be, and there is a major understated fact here that, if you can master it, this might be the most fun job in the world.