I could do a little brainstorm with you. Let's start with a few questions first...
[*]The population found this city, which is believed to be a city of the gods, several millennia ago, in the distant past[*]Whatever gods lived here are long-since gone
Originally Posted by kedcoleman
•The "game world" is a massive, floating, chunk of rock several miles above a world below
About the first note. Where and what exactly is it? Is it a complete fantasy world? Is it set somewhere in the future? If so, is it on a distant planet, or a post-apocalyptic Earth?
About the second note. So the gods are gone; where? Who are living here exactly? The gods' degenerated scions? Some humans who found the city by chance a few years/millennia ago? Other species/race/(arcane) mutated creatures?
About the third note (the first in your list). How are these chunk of rock floating? Simple magic? Massive electro-magnetic field? (if set in the future, could be used to block all electronic equipment, forcing settlers to "learn" magic.) Inner pouches of light gas? (In a dense atmosphere like Venus, or Bespin in Star Wars, it could be working. The world surface would be a hell of a place though, perhaps populated by dangerous djinns/weird aliens.)
About the city itself. Who is the leader? Is it a dystopian world, led by a totalitarian techno-mage, with perhaps a few rebel groups? Is it an utopian world where everyone has everything they need, with the help of the research on magic? In the later case, what is the population ready to do in order to protect their piece of paradise? To keep with your hindu/vedic genre, I would keep the utopian word.
I would mix the populated/non-populated land within and around the city itself. For example, a district in the center of the city holds weird and misunderstood magic; as a result, no one is living there, despite being set between heavily populated areas. Perhaps a group wishes to simply destroy the district and its weird magic to allow safe passing between the other districts, while another group wishes to preserve and study the weird magic, and another survivalist group is calling this dangerous district home against all odds. Meanwhile, a "typical" village has been built in a fertile valley; but the more it grows, the more it unbalance the floating rock...