Videogames typically use a technique called “Culling”, which basically means, when an object or a part of the map is not in view, or not in the area of the player, it is typically removed from the scene, to save memory/processing power. Once the player/camera is in view of a new area or in view of some NPCs and Cars they quickly get put back into the scene. This is why you can sometimes see Objects and cars loading in if you look at them zoomed-in from far away.
So to answer your question, when no one is around, the NPCs are simply removed from the scene.
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