You can find this area on the map after the [Monster Invasion] event card appears, and after you subsequently complete the quest The Seed of Sorrow. Aside from earning a trivial amount of XP, you can learn the location of the Goblin Village area by visiting the Lonely Mill, otherwise the area is completely optional.

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The location of the Lonely Mill area on the map.

From Tuskdale follow these directions to reach the Lonely Mill area:

• East (across the river)
• East
• East (to empty node north of Bridge Over the Gudrin River)
• Northeast
• Southeast
• East
• Northeast

When you arrive, you’ll find that this area is resolved entirely through an Illustrated Book Episode! Witness the goblins frolicking amidst their ill-gotten gains.

1. [Chaotic Neutral] Smiled, muttered “why not,” and took a place near the fire.

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(1 of 2) You can endear yourself to the goblins by taking part in their mischief, games and song,

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You can endear yourself to the goblins by taking part in their mischief, games and song, (left), or you can just refuse to participate, which appeases them just as well. (right)

This is the only option that doesn’t immediately end the encounter, making it a no-brainer. After this, the goblins will attempt to initiate you into their tribe. The goal of this episode is to ingratiate yourself among the goblins well enough for them to divulge the location of their village to you. In order to do this, you can simply pick the following options:

2. Answered that he/she doesn’t feel like it.

3. Firmly rejected to drink THIS.

4. I’m too tired to sing. You sing. I’ll listen.

That’s right. The goblins greatly appreciate being irredeemably lazy and unsociable. This will get you the information you need, even if it’s not the most interesting way of interacting with the goblins.

If you’re inclined to take a more active approach to things (keeping in mind that there’s no reward for it whatsoever), you can accept their first trial to steal food from the miller’s dog. Literally any option works to accomplish this.

The drinking competition is a bit more challenging, as it’s one of the few ways you can fail this encounter save from simply not interacting with the goblins. You’ll have to pass up to three [Constitution] checks, starting with a DC of 10, then 11 and finally 12. You can safely back out at any time, but if you fail, the encounter will end without you getting the information you desire.

Finally, you can help the goblins sing. If you pick the first option every time, that’ll please the goblins enough to make it to the end of the song, but if you give a line they don’t like you’ll still successfully end the encounter - they’ll just end the song prematurely.

All in all, the XP bonuses you’ll gain by succeeding at various checks aren’t worth the bother, although learning the directions to the Goblin Village will earn you 135 XP.