Shouldn´t be such a problem if it doesn´t exist all in the same place. We need some Dungeons if we don´t have dragons.
But the capital city is really crowded in the lower levels, especially if we consider the fact that it is near a sleeping volcano.
Contribution:
One of the most important cities of the halflings is the island city New Haven.
Most halflings still live on the floating cities but New Haven produces some goods the halflings normally have to raid for, like meat and non sea food. New Haven is more cosmopolitan than other halfling cities and necessary trades with the outside world are conducted there. The empire tried to invade centuries ago but rowed galleys are not of much use in the deep blue sea. This was one of the most devastating defeats the empire suffered in its history. The grand monarch stepped down immediately and the admiral of the lost pillar house Garren went into exile. Afterwards the navy was always the stepchild of the military forces of Eyros. The new galley project of the Praes Thanatos will be used as a pirate hunter near the coast where they will probably excell because of higher possible speeds.