Look at all those beautiful items marked in white boxes! Be sure you get all of these at some point before moving on!
Anyway, go inside the northeast house to talk to Mayor Spindell in order to progress to the next step point in the plot. He will give a bag of his village's goods and tell you to sell them at the southern town of Haggleton; that way they can pay for the special ceremony they're holding tonight!
The next step, then, is to exit the village to do as the mayor says. But, there are some rather dangerous enemies you can encounter called "Ornery Onions" along the way; these guys are strong enough to easily kill you if three of them fight you at once. You'll want to buy a Leather Shield from the Weapons and Armour shop (the building marked "D") before you go.