There seems to be some interest in random wilderness generation lately, and there is always interest in worldbuilding in general, so it occurred to me that we already have what may be the perfect participatory, evolutionary campaign world generator in the form of the board game The Settlers of Catan. I haven't tried it yet (since I just thought of it about ten minutes ago), but the idea seems too irresistible not to have been conceived before now, so I'm not claiming to be its originator. If you've already written, posted, tweeted, or talked about this before, congratulations. Great minds ratiocinate similarly.
Consider the possibilities. The geography is determined by the random placement of terrain hexes. Hexes! The settlements are established by competing cultures (the players) in logical places. Newer settlements arise as the cultures compete for resources and expand into the wilderness. Roads are built to connect the settlements. By the end of the game you have terrain, resources, towns, roads, and nations. And that's just the basic game. Expansion sets allow you to introduce things such as trade routes and city improvements. Once the board game is over, the GM has a campaign world with all these things and even a history of the interactions of the various cultures. All the GM has to do is assign names to the nations, towns, and natural features (such as mountains, rivers, forests, deserts, etc.). Further details can be determined by the GM as needed, such as town maps, names of leaders, types of government, etc. The GM can create random wilderness encounter tables for each hex or use those provided by the preferred rulebook. If the campaign grows beyond the island, play another game of The Settlers of Catan to create another island. If an island is too small, call it a continent and treat every settlement as a collection of villages and towns with a city as its nucleus. The beautiful thing about it is that the worldbuilding process becomes more of a game than a labor, everyone gets to participate in shaping the world before role-playing in it, and the world arises organically from a process of evolution rather than creation. There is nothing wrong with authorial worldbuilding, but I think there are alternative methods that can be equally rewarding. Both methods, in fact, could be employed in building the same world. Certain lands, for instance, might be more recognizable to player characters whose players participated in their creation, whereas more distant lands might appropriately seem more foreign for having been wholly conceived by the GM. In a way, the board game worldbuilding phase serves to familiarize players gradually with their characters' backgrounds on a macro level.
The placement of dungeons, catacombs, and ruins is entirely at the GM's discretion, of course. Certain settlements could be designated as ruins or as having dungeons beneath them or nearby. Many important destinations, however, will be in remote locations far from any sign of civilization. It's good to preserve the unknown even in a land the players helped create.