How to make and play good NPCs that aren't DMPCs?

Key feature number 1: do not allow your character to outshine the PCs. The PCs are the protagonists. They are the ones who drive the plot. They’re the ones who make the big decisions. They’re the ones who are the most interesting and developed. You can hint at NPCs making their own decisions and being interesting in their own right, and maybe even steal a scene or two, but let your PCs be the stars of the show.

Key feature number 2: an interesting NPC has something interesting about them. I know that must sound blatantly obvious, but it’s something that DMs forget. If it’s something in their physical description, it must come up multiple times (don’t go overboard, though) during interactions with the PCs. Better than some interesting physical detail is action and personality quirks. Players are going to forget the physical stuff for the most part unless it REALLY stands out, but they’ll remember what NPCs do and say because they’re supposed to remember what NPCs do and say: that’s how PCs get in-world information, after all.

Key feature number 3: have a few relevant facts about the character, but don’t bring up these facts unless the PCs ask. THEY are the ones who determine whether your NPCs are interesting. They’ll get excited about characters you might not expect. Go with the "rule of three" and just have three interesting facts about the NPC and don’t become too invested in them unless the players do. Let your NPCs evolve naturally over time. Add new details as they become relevant.

Key feature number 4: don’t let your NPCs emulate JRPG NPCs. In Japanese role-playing video games, NPCs simply wait in one place perpetually, as though the whole meaning of their existence is to interact with the PCs (because it is). Rather than having all NPCs at easy access at all times, only give them access when it makes sense to do so. They want audience with the local lord? Sorry, I know you’re the heroes who saved the town, but he's currently holding audience with the merchants' guild leaders. Want some weapons? Sorry, but the blacksmith has gone to secure more materials and she won’t be back until tomorrow. You can handwave wait times if the party is willing to wait, or let the PCs choose to take action (say, break into the lord's audience chamber or chase down that blacksmith). In either case, denying the party immediate access to the NPC makes them feel like they have a life beyond the PCs. Don’t necessarily do it ALL the time, just when it would make sense. If they’re supposed to be "a very busy person" it’ll come up more often. And it’s fine to render the environment as it comes into view. The players say they want to visit the castle? Ask yourself what the lord is doing right now and tell the party when they get there.

Key feature number 5: don't predetermine interesting characters. I know I mentioned this in point 3, but don’t set out to make THIS character one that your players fall in love with. Minimize your investment to maximize your return. Give your NPCs just enough features to make them interesting to you and make you want to ask questions to find out more about them, but don’t put in anything more than that. Perhaps this barmaid is a flair bartender and is very agile for a slightly overweight woman in her fifties. Maybe they’ll ask questions of her, maybe not. Maybe the innkeeper walks with a limp and uses an iron cudgel as a walking stick. Maybe the party will want to know about that, maybe not. Don’t write backstories on them yet. If they ask that barmaid about the werewolves, maybe she had to put her husband down, she explains while pulling out a silvered dagger. Just come up with new details on the fly.