I'm fine with you creating towns or smalls cities or minor characters to your heart's content. Like when you signed up, you made up Most Holy Order of St. Gregor, and Totemic created the Sun Empire, and Moerin just invented a "neighboring kingdom"; those are all a-okay in my book, since they create... something
... that makes the character have more depth, but at the same time is ambiguous enough that we can merge them together into some sort of coherent setting without having to retcon a ton of stuff.
Just make sure that whatever you make up out of the blue is populated by "normal" races (pretty much any flesh-and-blood race that people created in the signup is good) and not, say, a goblin city, but you probably weren't going to do that anyway.
Oh, and you can assume that the kingdom has an ocean on the east and north-east borders, a few neighboring countries to the south, a marsh somewhere on that southern border, a pretty big lake somewhere, a big forest in the north-west, and a big desert way out past the south-west border where a bunch of semi-lawful border cities lie. That should give us a good bit of leeway with whatever you want.
edited 23rd Mar '12 9:02:54 PM by nman