The remarkable thing about Mass Effect's conversation system is that it is not a "revolutionary" change. In most games where you're allegedly supposed to be talking to other characters, conversation is done through a traditional dialog tree, and has been for probably decades at this point -- at least since the first point-and-click adventure games. You pick something to say off a menu, then the NPC responds, then you get a new menu and pick something else, the NPC responds to that, and so on until one or the other of you draws a gun. Although simple, this does the job, and certainly nobody's been able to come up with a better solution yet.
The dialog tree did take a hit, though, when games moved to full voice-overs and fully animated characters (as opposed to merely printing the responses in text format.) Now, a standard dialog tree has become rather awkward, because the conversation runs like this:
1. NPC says something.
2. A list of your options appears on the screen. Each option is a complete line of dialog the hero will say.
3. You read the options and choose one, while the NPC and the hero stand around staring at each other.
4. Having selected an option, you now sit and wait while the hero's voice actor recites the exact same line you just picked.
5. Repeat ten million times.
I'd never quite realized it, but this is absurd, and this is the problem that Mass Effect's system solves. It does two simple things:
1. Instead of the full line of dialog, the list of options shows just a brief summary -- usually only three words or so -- of what the option will make Commander Shepard say. Adding to your ability to choose quickly, the options appear on a simple wheel where the position of the choice adds additional information on how friendly and/or direct your tone will be.
2. The option wheel appears well before the other party has finished speaking, but after the gist of it is pretty clear, so you can queue up your response to go off as soon as it's Shepard's turn to speak.
This doesn't sound like much, but in action it's a revelation. When the other party in the conversation is done talking, you've already been able to see your options, pick one, and select it, so Shepard replies immediately, and not only that but "your" dialog is still interesting to hear as you don't actually know what specifically "you" will say until it is said. (Granted that the summaries aren't always perfect with the result that Commander Shepard comes out with some pretty startling things on occasion, but that's really an implementation detail.) The resulting conversation flows smoothly without any awkward pauses and holds the player's attention and interest the whole time. It's a beautiful refinement of the dialog tree system and I'm honestly going to have a harder time in the future with games that do it the old-fashioned way.