An NPC is a term that means non player character. If the players are thought of as the main cast, then NPCs are used to make up much of the supporting cast and the extras. It is often used to describe neutral entities like shopkeepers and the like.
In Legend of Dungeon, there are a select few NPCs that reside in the Tavern, and many others that can be found while traversing the dungeon which may assist you on your quest. The Tavern's residents will become hostile if you attack them, but the NPCs in the dungeon may or may not depending on the specific one.
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