Great idea! I love how you made the kids focus on their characters first.
Although I do create my continents fairly early in my map-making process, I don't do much more than the basics until I find out I need them. In fact, Velantia is the only place where I created most of the place names as I worked on the map - though the main things had already been covered in the stories I was working on.
When I build my cities, I do it after I've written a story featuring it - i.e. when I need the map to make sure future stories are consistent and "work" with what I already have. So, yes... I make my citizens before I make their city/country...
With all this attention to detail, you brain becomes the matrix where the story can exist. I feel like since Tolkien, who by the way got made fun of by his littérature club, universe building would never be the same.
Have you ever had a dream happening in your imaginary land Velantia?
So far, my Dreamworld has stayed politely out of Velantia - and every other place I've created for Terrenden. Saying that, my Dreamworld tends to feature real places, but in impossible configurations, so it's definitely possible.
We are our imagination isn’t it?