I think I'll call this city Zagadur.
Anyway, I've been thinking about how magic interacts with the setting as a whole. In LotFP, like in most D&D-type games, there are two types of magic - D20 calls them Divine and Arcane, while LotFP calls them Lawful and Chaotic. I'll stick with that LotFP definition - and give it a meaning in the game world. No, there isn't a total war going on between Law and Chaos in this world; things are more complicated. Chaos is unnatural, unworldly, yet intertwined with the rest of creation. Law is the natural world, the mundane (and divine?) "reality".
Both the Old and the New Faiths are Lawful. The Old Faith worships a quasi-monotheistic nature/agriculture goddess (of the Maiden-Mother-Crone type); the New Faith worships the Mastersmith, a monotheistic god focused on craftsmanship. The Old Faith has a less aggressive stance towards Chaos, and merely seeks to contain it and to ward against its worst excesses; the New Faith seeks, in theory, to smite Chaos whenever it defiles our reality; in practice, certain types of chaos (such as Changelings and some M-Us) are tolerated by all but the most fanatical sects.
Fey are the most common manifestation of Chaos in the Mortal Realm. They dwell relatively "close" to reality, and thus, in many cases, resemble worldly creatures and plants - sometimes even humans - to a degree. Further away from reality lie far more alien things - the creatures summoned by the Summon spell in LotFP. Fey sometimes abduct Human babies and replace them with their own - this leads to Human-like Fey being raised by Humans (these are the Changelings), and while their standing in society is quite low (most people distrust Fey), they are usually tolerated (usually is the key word here - sometimes a more fanatical sect of the New Faith lynches them).
Low-level Magic-Users usually consort with Fey one way or another. High-level Magic-Users usually learn far more bizarre truths and consort with far more alien beings from Beyond the Veil.