According to the creators of Sonic and the Black Knight, the townspeople were designed to embody the spirit of the forest.
The townspeople are a race of humanoid creatures resembling a cross between dwarves and elves. They have long pointy ears, dark eyes, and they usually have pale, yellowish skin. In terms of height, the townspeople come in different respectable size, though they can be as tall as about 6'6". They usually wear full-body cloaks and have facial tattoos.
While not strictly resembling humans, members of their race such as Merlina the Wizard can bear a closer resemblance to humans, standing taller with more human-like body proportions and similar eyes, with only their long ears being their distinguishing trait.
Characteristics and Culture
The townspeople mostly live a lifestyle similar to that of real-life people in the medieval ages. Just like humans, most of them just want to get on with their lives despite the craziness around them as they do not like to concern themselves with trivial matters.
Many of Sonic's quests and missions in Sonic and the Black Knight often involves Sonic aiding the townspeople in some way. While the Townspeople will continue their lives throughout the adventure, they will only interact with Sonic through Acts of Chivalry or need his help. It is considered dishonorable to attack the Townspeople thus earning the name "Despised One" in the treasury. When enemies appear they will flee but can still be harmed if Sonic is not careful when attacking.
Additionally, the player can collect a number of townspeople from each Mission in the game, where they are called "Followers", which can be used to improve the player's title.
The townspeople are favored food of dragons, as they have been seen captured in Crystal Cave, where they are to be served as dinner for the dragon.
Merlina, a more human-like member of the townspeople.
↑ 1.01.1Sonic Team (March 13, 2009). Sonic and the Black Knight. Nintendo Wii. Gallery. Vault 1. [Townsperson] "They were designed to embody the spirit of the forest. Like plants, they breathe in carbon dioxide and breathe out oxygen."
↑ 2.02.1"These native people of Camelot are not strictly human – they breathe in carbon dioxide like the trees in the forest, instead of oxygen. But like us, most of them just want to get on with their lives despite the craziness around them, as they don’t like to concern themselves with trivial matters. However, as Sonic helps them throughout his quest, the Townspeople will gradually warm up to him." - Sonic and the Black Knight Official US website.