It seems to me when you say fun as in "gameplay" you're actually referring to "mechanics". Anyway for me it's about immersion.
And this is where both narrative and mechanics work in unison to create that effect. A believable world populated by believable people, supported by a fascinating lore, creates the setting that the player can invest themselves into the experience. And mechanics are what facilitate the interaction so the player is always connected to the experience. Broken, unbalanced, or counter intuitive mechanics, basically if you have to struggle to play the game, really pulls you out of the experience. Just as a poorly crafted world or character scripting disrupts the illusion of the reality the game is trying to create for the player.
It would be ideal if both elements are at their optimal design, that each could stand on their own apart, and coming together in a near perfect package. But that doesn't always have to be the case. Even if each component still has a couple of minor flaws, it's more important that they combine to complement each others strengths while balancing the short comings.
Essentially the model of the whole being greater than the sum of its parts. And it's games that achieve this which are for me the most enjoyable, or as you say the fun factor.
I should also say, character/narrative driven games aren't necessarily a requirement for a good game. I enjoy fighters that while having characters, the game isn't centered around their journey or adventure. It's just a pure combat game. Or racers which have no character at all (or maybe only a minimalist type as the driver). And of course the old school arcade style games of platformers or other basic designs to level traversal. They can be built on a solid foundation of mechanics which carries the entire experience, and these can be very enjoyable, no doubt about it. But they'll never be immersive, and that's the type of gaming experience I'll always favor above all else.
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