If we have full dive VR would there still be people living in real life? Maybe it will be an extinction level event? I am mainly referring to systems such as Neuralink, or Brain Computer Interfaces, not headsets.i.e sao, the matrix etc
Excluding factors such as morals and religion, eating and drinking, bodily functions, , need to reproduce.
Maybe some people will fetish the real world and refuse to leave the real world?
Maybe the definition of reality could be extended to include VR metaverses as viable living spaces
In VR people can do things such as fly, and do magic effects which can't be done in the real world which increases their happiness. Or even people can have virtual girlfriends, kids or families.
Would real life cities, towns and municipalities become ghost towns if this was to happen?
Keep in mind that someone has to maintain the infrastructure. Unless all food (or nutrient goop) production, all hardware production, mining, healthcare and such is automated, there will be people in the real world, walking either in biological or mechanical bodies (telepresence).
Even if machines took care of us, I don't believe that the desire to have children will ever completely disappear. I'm sure there would be ways to have and raise children for those who want it, even if it became ever more troublesome compared to the virtual life.
And then there are the virtual families you mentioned... If an AI actor can't be distinguished from a real human, even after decades of living together, I'd say the AI is alive. It could, maybe, eventually, mean that biological "humans" would get more and more rare, and depending on what your definition of "human" is, might go extinct, but something close enough (IMO) would continue to live in the digital world.
Real world cities might become ghost towns, but I believe some places would still be popular tourist attractions. Maybe not for the experience itself, but for having visited a place IRL.
In any case, this wouldn't be happening any time soon. In the wealthiest countries it might start in the next 50 years (very optimistic estimate), but it will take at least centuries more before all of humanity spends the majority of their time in virtual worlds. Even after that I don't think an "extinction" would happen in multiple millennia.