Most towers and baileys are defensive, protecting defenders from attackers. This keep tower and bailey is used to protect everyone else from what is within.
Some time magic users are less magical than one expects.
The district gets its name by the good sized walls that are painted a bright blue that mark the magic district. That wall is watched by the Witchhunter guard.
Helioglyph (his magical name) is a Talismonger, a maker of charms, talismans, holy items, and so on. This is the place where those seeking fine craftsmanship and good symbolism come. If you are looking for enchanted items, go elsewhere.
There are more ways than one to encounter a dragon. With a low level group it's obviously not feasible to meet one in its lair and fight it. But standing on a bleak moorland, utterly exposed and vulnerable, it can be a chilling experience to see something flying far far overhead. Something that could just be an eagle, but you never know...