Your castle influences your population and kingdom's growth. It can be upgraded up to forty times, with each time resulting in an increase in your kingdom's population. The layout of your kingdom is not very important. Just keep your castle in the center to make it easier to keep your people happy and productive.
Expansion
When you need more space, purchase a deed from the Orc Merchant which allows you to buy a new plot of land. You can only purchase one deed per level, unless you spend Crystals. New lands must be cleared. It will cost gold and take some time to remove the trees, mushrooms, rocks, and crates. When expanding your borders, try to build evenly around your castle to keep it in a central location.
Resources
Your most important resources are Gold, Crystals, and Raw Materials. Gold is used to purchase buildings, add new land, and place decorations. Gold is rewarded by completing quests and building cottages (where it will accrue over time) Crystals are rare reward from quests. They are used to build structures faster and to purchase certain decorations. A small number of quests also require Crystals to be spent for completion. Raw Materials correspond to your kingdom's productivity. Certain buildings generate raw materials, which then can be used to upgrade various structures. Build a lot of resource generating buildings early. Create extra cottages and collect wheat, water, sugar, and bread whenever possible.
Townspeople
When the marketplace becomes available, go there to find orders from your townspeople. Complete the orders to earn gold, experience, and other resources. New people in your town will occasionally have an exclamation point appear above their head. Help them move in so they can provide new resources and quests.