Just short and simple, they let you know. But it could also be subject to a check on whether or not they like you, if they're in a faction for instance. Maybe store clerks are all willing to tell you, but some other bad dude not so much.
Think it would be fun and generate more familiarity, lore and stories behind those NPC's.
Fun and themely. +1
A related idea could be:
NPCs often move about and they are portrayed as being established and somewhat in the know. So have each NPC that wanders greet other PCs as they see them.
For example, Chaz could have a list of known NPCs. If they enter a room with an NPC on their list, they will greet them by name and anyone who is there will get a fun tidbit of knowledge. Further, the the other NPC also has Chaz on their known list, they will greet Chaz as well.
Further, one could expand this list to known characters and GMs can add PCs to the list if they feel the PC is known well enough. Could also include relations to determine the tone.
