There are a number of characters and monsters in the Taskmaker world you can fight and communicate with. There are three alignments of characters, good, neutral, and evil, and four moods- Happy, neutral, angry, and frightened. While happy or neutral, characters will wander around aimlessly, with the exception of shopkeepers who will follow you without attacking, and guards, who when neutral will stand still. Angry characters will follow you and attack when possible, and frightened characters will flee and attack if you come near. Killing too many good characters can cause major consequences.
There are four ways to interact with a NPC- You may attack them, Frighten them with the Frighten spell, Transact with them to speak with them, and Bestow an item to them to increase their mood. Very often bestowing items to NPCs will provide hints for the current task.
Townsfolk- People and animals wandering aimlessly, occasionally giving advice. Occasionally they will give useful advice if you bestow an item to them to put them in a good mood.
Shopkeepers- Will follow you, but not attack unless angered.
Guards- Fixed townspeople who will attack you if they see you attacking other townsfolk or attempting to destroy a Taskmaker requested item.
Monsters- Will attack you indescriminately.
Taskmaker- Stays in a fixed location, and will give you Tasks.