The queen told you the dragons abducted a princess and took her up there.

Each person who lived in that town has a story.
One of the boys in the fairy forest was never in the orphanage, he was washed down the river from the mountain town into the magic forest, when the bridge was demolished. The fairies enjoyed playing with him and decided to seek more boys. This boy wants to return to Nostrum and hints at what really happened there (as opposed to what the escaped miners claim)

After you acquire the Jump ability, escaped miners appear in each town, each giving a conflicting account of what happened. They're all lying. The people in Yipe believe the miner, and provide more details of his version, coinciding with the queen's claim, but suspiciously also reinforcing the idea that the abducted girl is actually her daughter.

Kara is a princess, but she is from Nostrum's now-abandoned castle, inside the base of the mountain. She was exiled by her father for her bestial curiosity and hobbies. Her father later fled after the dragons were found. He believes what the miners say and has no desire to return to what he assumes is a ravaged kingdom. Kara decides to return to her castle. It's better without her father. She wants to run things her own way, cooperating with the dragons, and maybe encouraging a kinkier relationship with the town.