I don't think it's any more difficult. It just depends on how the narrative is approached. With an undefined character, you'd want a narrative that relies on the characters personal goals and a world that has interesting, but mostly optional things to do and achieve and meddle with. The player character is more like a wild card that enters the scene (or not, if he chooses not to) and affects how things roll with his actions.
It's more difficult for the reason you just stated. The narrative has to be written with the characters in mind. Throwing any character into a story can lead to a narrative the character just does not fit into. An altruistic, empathetic, hero works with a story involving heroic deeds. A self-serving psychopath does not fit with this type of narrative. You end up with a character whom is, well, out of character.
When you have a set, well developed character the attributes, wants, desires, and persona of this character is known ahead of time. It's far easier to look at this character and create a narrative they fit into appropriately (or vice versa).
Most games with multiple character types and personas you can pick either limit these character types, so they can account for each option in the narrative, or give a plethora of options and develop a story where the character persona isn't a focal point, or completely irrelevant. This to say the story is just there, anyone could be integrated into it and the character is just there.
Skyrim (and Bethesda) doesn't give a damn about storytelling, it has a narrative arc because it's accustomed to have one, but it is a game about just "doing stuff". So in that light the comparison to Witcher 3 - a game that is HIGHLY narrative driven and predefined - is a bit unfair. A more fair comparison is to Fallout or Fallout 2 where the story builds up as you go and how you choose to go and the ending provides the long term consequences. There's an interesting world to explore, an effective narrative that's mostly player driven, but the predefined path is really, really open. You get just the amount of depth of storytelling as you choose to.
Yes, Skyrim writing wasn't anywhere near the level of W3. This isn't the reason for the comparison. In Skyrim the focus is on the character living in the world, and experiencing a very large number of small, often unrelated, narratives or mini-stories. You run across a random mine owner and clear out the giant, evil spiders in his mine. You join the thieves guild to steal things, because, uh... stealing things is fun. The main plot is secondary to all of this and completely optional. Skyrim is less of an RPG and more of an exploration, adventure game.
The main reason for the comparison was to show the difference between a single, developed character, in Geralt, vs whatever the player wants to be. Most games taking the latter path do exactly what Skyrim did. They focus on unrelated stories, exploration, getting by and spend far less effort establishing any well developed narrative.
The other reason for the comparison is because in W3 you actually felt an attachment to the characters and the story. I honestly cannot think of any highly open ended games where this was accomplished on a comparable level. You could argue this is based entirely on poor writing or narrative design. There is no doubt this plays a role. It's also partly because getting a video game story to accomplish this, and draw you into it to this level, is close to impossible to pull off when you give so much freedom to the player you cannot account for all of it in the writing.
