Fiction vs. Mechanics
"Fiction" is the imaginary events and actions in play. Players stop focusing on the fiction and focus only on the mechanics when it happens in play that the fiction stops affecting the mechanics.
"Why should I take the energy to give a creative description when it doesn't affect anything and the dice determine how things turn out? I might as well just get to the dice and the numbers, then."
It's not like anyone consciously thinks this, but people tend to take the path of least resistance and easiest solutions. When the fiction stops mattering, they end up sticking to the numbers out of efficiency.
Luckily, there's two easy ways to fix it.
"How do you do it? Ok, here's a modifier"
When the players want to do something, ask for HOW they're doing it. Apply a modifier based on the idea/description and tell them why it earns that modifier.
"Oh, yeah, he's playing defensive but because you're yanking his shield out of the way with your free hand before striking, you get a bonus - he wasn't expecting that."
Alternatively, change the outcomes or add a condition as a result of a described action - "If you do that, he'll be knocked prone! Being laid out completely on burning coals is going to also leave him stunned as he writhes in pain. Vicious!"
Appropriate NPC/monster reactions
Years back I played in a 2E campaign and the DM was a construction worker. One day he pulls out a short sledgehammer. "This weighs as much as a warhammer. Pick it up. Feel the weight? Ok, now imagine getting hit with this thing. That's 1D4 hitpoints. Is that something you're going to shrug off?"
In his game, he was very good about having monsters run if they took a bad hit, or saw someone pull out magic. When you apply the same fiction to the NPCs, the players learn that there are ways to get benefits besides what the straight numbers can provide.
Now, as to tension? Tension is a special trick by the GM.
First off, you have to realize you can't force your players to care about any specific thing. What you do, instead, is you pay close attention and when you find out something they do care about, you note it and you use it as the thing to threaten/build situations around. You follow the players' leads as to what is exciting.
What DO they care about?
Think about the last time you saw this person excited about something - a new movie, a videogame, whatever. When you see them show interest or get excited, you're on the right track.
Most of the time it's going to be something like a problem with the world, the wellbeing of an NPC or how their character's reputation status is in the eyes of said NPCs.
Threatening the things they care about isn't as easy as "or it'll be destroyed!". It's better to make it a clear, but non-final problem. Things can always get worse. Even though, in theory, they can afford the failure... players will break themselves trying to stop bad things from happening to things they care about. Rarely you can put destruction/death as an option but usually after you've put up enough other potentially outcomes.
Player engagement depends a lot on them actually being able to influence the game. If the choices they make do not impact the results, they stop caring. This is most successful when you don't have a railroaded possible answer or result. When the players realize, win or lose, it's up to them? And the choices they make will help create that? they bust their asses. The victories are theirs, the losses are theirs, and that's where players become engaged.
Having a world open to player interactions, outside of what you planned for, is what gives incentive for players to do unique and fun things, and to push their characters to the limit. It also means when you do threaten the things they care about, they don't feel it's a cheap hook to get them to do a specific thing - rather it's a challenge they can take up and fix, and know that it was done by their own work.