Never took notice of it before, but the castle at Mt. Hildar is called a "coliseum". And though such structures were historically used as fortresses and quarters, the term suggests an arena of sorts, or at least a site for activity and spectacle. (Castles tend not to be centers of liveliness.)
I'm thinking the capitalisation is just minor design. If there are a lot of people in a single area, it would be more difficult to chat--not because of text style, but because of how chatting works. Chatting neither works well nor consistently in the demo. Hoping also that the hovering username can eventually avoid truncation.
On another note, I'm pretty sure everyone who's walked around some has noted the tile warping in certain areas.