Originally posted by Tachyon:

Friends. Technically the game is set in the Norse afterlife, so NPCs wanting to settle into a village isn't really going to be a thing.

Depends. Valheim is not Valhalla so it could be a mix of both Valhalla and Hel. Hel in Norse myth was not like the hell of Christianity. People tended to continue to "live" much like they did when they were living.