NPCs are the survivors of the supposed apocalypse which the world is set after. Also, new NPCs and merchants can be unlocked by defeating bosses. The first NPC you encounter is the Old Man, you meet him as soon as you start up a new game and he invites you to his home to discuss what happened. Upon reaching the Old Man's home (The only intact one in the settlement) the bed inside is set to your home and he tells you a little bit about the Nightmares. Please note that this house is a safe haven for the first few nights as you can hide inside completely safe from the Nightmares, past the first few nights the player should be looking to create their own house however as you cannot craft within the Settlement. In addition, the Old Man's house contains a Workbench and Fireplace.The next NPC the player will encounter is Avguard who stands by a lamp at the northwest entrance to the Settlement. The last early NPC the player will meet is the Witch, who can be found in her candy house at the edge of the top side of the map. She is a major part of the initial Quest line started by the Mysterious Note, which drops from the first Nightmare you kill. Within the Witch's house is a Cauldron, which can be used to craft advanced food meals if the recipes have been unlocked.
After Defeating the King Slime, a heart is dropped. When picked up, the top left house in the town will be repaired and two NPCs will be inside. One is a candy salesman, and the other is a little girl who will exchange a toy for the most expensive candy that is sold. Joe (the candy salesman) will then prompt the player to retrieve his candy-bags and then tell them about the Cave of Ringing Wind and the Ice Queen.
In the cave, the player must speak to a dwarf named Todolf and bring them 5 units of wool. Once the player has done this, Todolf tells them that a shaman has found a secret entrence into the Ice Queen's Chamber. When the Mushroom Shaman is encountered, he requests 10 units of brillig mushrooms.
After defeating the ice queen, the bottom right house will be repaired and a blacksmith named Roland will be inside. He begins the next string of quest and sells necessary mining and crafting resources. Roland can also repair the player's tools, weapons and armour in exchange for money.