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.
How Jayel became the proprietor of the Wanton Wench is more or less a hand-waved affair by the local officials. The facts known by 'upstanding' folk are that a fresh-faced young girl by the name of Jayel came into Gatewatch, disappeared, and reappeared the aged and stern woman she is today. The facts known by the night watch are a marked decrease in drug trafficking and battered women appearing on the streets. The fact known by Jayel is that she killed a man with her bare hands, and has never looked back.
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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.