Emerikol, if I understand you right, you do alot of prep beforehand and then in play you reference your extensive prep so as to determine what might be around or what might occur. In play you restrict yourself to only referencing the prep for the determination of what else might exist, not just making things pop into existence out of thin air. And this restriction on relying on the prep only makes the world more palpable and solid, as a result.
If I'm even slightly understanding you right, I'm just saying this because I'm not sure the other posters get the difference - and there is a difference between working from prep to determine what else might exist Vs just making stuff pop into existence because it might engage someone.
I will say though, although I don't know what it was like in the game with the guy 'totally making it up', I've roleplayed for so long I basically have alot of prep about game worlds in my head - it's all written in my head and doesn't need to be written down. I don't think 'totally making it up' is such a problem as you describe it (oh, it'd be better if I wrote it down, I totally grant). I suspect what was happening is that GM was simply trying to guess what would tickle players fancy then say that exists, in what is essentially sucking up to players. I'd find that hollow as well. Though I've been in worse games.
[RR] The 13th Age
14 hours ago