The terrain beyond the immediate surroundings of the dungeon area should be unknown to all but the referee. Off-hand adventures in the wilderness are made on the OUTDOOR SURVIVAL playing board (explained below). Exploratory journies, such as expeditions to find land suitable for a castle or in search of some legendary treasure are handled in an entirely different manner.The rules then go on to describe two different procedures for generating wilderness encounters, one for randomly generating castle inhabitants and determining their behavior, the other for randomly generating monsters on "exploratory journeys" in the wilderness. It's tempting to say one procedure is for inhabited lands and the other is for true wilderness, but there's a "city" category in the second procedure. The wording of the quoted text makes it sound like the land changes based on the party's intended purpose for traveling in the wilderness.
What I want to say is that the random castles are for lands that have already been cleared for a stronghold by previous "adventurers", while the monster tables are for lands that the player characters could potentially clear for their own strongholds. If that's the case, we need some kind of rules, random or otherwise, for placing castles in "cleared" areas; something like:
The starting town should be within a 20-mile radius circle centered on a castle or stronghold, and there should be a string of similar castles no closer than 40 miles apart in what is considered the civilized area. The 20-mile radius around each castle is considered cleared of monsters, so no wandering monster rolls are necessary, but there is a random chance that the castle's occupants will investigate or confront any party traveling through the area.This does leave a question about what to do with "City" encounters on the wandering monster tables. Is this for cities which somehow do not have a baron protecting the area? Ruined cities? Roads between civilized areas, but outside the 20-mile zone around any stronghold?