Pathfinding still has some bugs, which I'm seeing more of now that there are so many NPCs in. I have modified it to try and make the NPCs walk on "pathway" type ground, but it's not quite perfect.
Cool thing: I'm going to probably modify the in-game pathways to match the NPC walking paths. That is a nice feedback cycle! Make the terrain -> Place the houses -> Place the NPCs -> Build NPC Day-to-day schedules -> Modify the terrain where the NPCs walk. If it was a really sophisticated system, then the terrain would erode naturally where they walk. That's sort of what I'm doing manually.
I have fixed lighting, it's much nicer now, not washed-out anymore. As well, there was a bug with sprite picking that was fixed, this was an interesting one and related to the sky parallax. Today I'm just fixing/tweaking pathfinding some more, so the NPCs look more and more natural.
I also have added a special behaviour; when you get near to an npc, they turn to face you for a few seconds; i.e., they "notice" you. This makes it easy to click on them to talk to them, and it looks cool. If you don't chat with them, well then they go ahead and do whatever they were doing.