When I'm actually writing NPC dialogue or other text that will appear as-is in the game, I assign each piece (meaning that the game will deliver it to the player as one chunk) an alphanumeric ID number. If it's an interactive dialogue or story I have the pieces arranged into a flowchart in addition to the basic linear format. Depending on the game and the development model (what you content you plan to make first vs. last), it might make more sense to categorize the linear part by:
- NPC (or by item for flavor text, and by object for text that appears on signs, pieces of paper, or computer screens within the game)
- Location within the game
- Time period within the game world/plot
- Quest line.
Then you can use hyperlinks or whatever to link those collections of dialogue pieces into their relevant places in the game design document if you want.
I want to help design a "sandpark" MMO. Optional interactive story with quests and deeply characterized NPCs, plus sandbox elements like player-craftable housing and lots of other crafting. If you are starting a design of this type, please PM me. I also love pet-breeding games.