Re: The City in the Dungeon
Back when I played Tunnels & Trolls, I posited that the dwarves had expanded their sprawling underground kingdom so much that any further tunneling would impinge on territories claimed by monsters. One direction led to trolls, another to dark elves, etc., with "down" being a route to chthonic demons. And as the kingdom was so sprawling, lots of technically law-abiding tenants had underground complexes that were used for secret magical research, worship of less-than-nice gods, and so on . . . and there were also forgotten tunnels that were home to gangs, savages, huge rats, and the like. Thus, there were de facto dungeons all around and even within the kingdom, and no shortage of wealthy dwarven quest-givers hiring adventurers for military scouting missions, deputizing delvers to clear out lawless areas, and so on.
Still, the kingdom was pretty civilized, and it was never all that long a haul from a dungeon. Town – and in fact good-sized cities, plural – were in a sense "in the dungeon." (Or sometimes the dungeon was in town: Evil Lich-Guy's Lab of Horrors was behind a secret door at the back of Ye Old Magick Shoppe.)
This would be an interesting default for town. Certainly, if most of the world's delving happens in a place like that, it would be easy to accept that just maybe, the surface world is almost normal, and that hack 'n' slash heroes are regarded as "crazy, dangerous mercenaries from the badlands" up there.
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