Well maybe not permadeath, but at least something.
Regardless, you'll typically just reload from a previous save if you die and suffer some penalty. Which suggests that the only failure is that which you accept, and so the game becomes an exercise in continual advancement. Unlike in real life or a pen and paper RPG, where sometimes a setback happens but you just have to move on, a computer game without permadeath means death has no effect at all.
It's like when you get a save point, then a long cutscene you can't skip, then a boss fight. The cutscene in that case is only a punishment for dying, and it's the only punishment.
I think a permadeath server would need to include a way to use Raise Dead still. Like if you died, you would leave a body that could be looted, and it could be buried by some other player for a piety benefit. If you get buried, your buried corpse leaves a tombstone that can be raised by a Cleric within a couple days realtime. The problem there is that once a player gets to level 9 Cleric, he can raise his own characters anytime he likes.
D&D 1E and 2E had a system where you could be raised only a number of times equal to your CON score. After that you couldn't be raised. And you had a chance of failing to raise, which meant regardless of your number of chances left you were perma dead. And there was a time limit for the lower-level version of the spell (I don't recall if Resurrection had a time limit) so you couldn't raise someone dead for a thousand years.
I think the WOW system of equipment degradation is funky. EVE is harsh but that's how it would work - you lose whatever equipment you had on you, your ship you were flying, and any knowledge gained since your last clonal "backup". The old Car Wars had clones and used the same system EVE used.
Ultima Online just made you a ghost if you died, and you had to be raised by someone with a spell or travel to a healer or resurrection ankh - usually far away in a town. By the time you return, your body and your loot has decayed or been stolen. But there's no penalty for being raised by a friend right there.
Or, if you wanted to be sent home, you would lose a bunch of stat and skill points as a resurrection penalty, and of course you'd have to get back to your corpse in time to pick up your stuff. But because the trip is one-way, you're more likely to get there in time.
One problem with NWN is that it's, like the FF style JRPGs, a story completion game rather than an RPG. You are not playing a role, you're just following along with a character who is already scripted out. In some places this is made painfully obvious:
Dialogue: "Do you want to come with me to the castle?"
(Yes) "OK, let's go!"
(No) "Oh you're making me sad, stop joking!" (Return to Dialogue and ask again)
So if your character dies, the story can't continue along without him because they didn't specifically write that into the story. Except, off the top of my head, Chrono Trigger, FF7, Planescape: Torment. Again, these games predicted a death and built in a way to deal with it. But only in the last case is it a general usage in all deaths - the other two have specifically scripted death scenes and if you lose a battle otherwise you just get the game over screen.
In a true RPG, representing a world and letting you play in it, having a character die is not a problem because you can jump in with someone else and keep playing. Maybe not the same story, but maybe you do actually pick up the same quest. Example:
You roll up a farmer. You do a little farming, marry a cute girl in town, but goblins attack and destroy a few houses. You decide to grab an axe and stalk them until you can pick them off when they're alone. You realize this is pretty fun, so you leave the farm to your brother and wander off in search of adventure. Besides, you're tired of the Harvest Moon activities
Your adventurer later dies. Oh well. But you can now choose to play someone he encountered along the way, and if you do the game generates a connection to the death of the adventurer. Let's say you choose to play the wife. You control her as your character, and receive a letter stating that a traveling priest had found the corpse and inquiries led them to the farm. You could go out adventuring with her using the magic sword your old adventurer carried (assuming the priest didn't loot the body), you could pick up the priest as a henchman, you could convince the priest to take you to his monastery where you can become a nun. Whatever.
Point is, if the game is robust enough, and is actually an RPG, death isn't the end of the game and needn't be avoided.