On the world map explore the coast north of the glimmering forest, just north-west of the Bedokaan village. (more accurately, map coordinates 1320W, 181S) There you should find an location marked "Secret Village"

When you enter it, you'll find a village of red and white mushroom-houses and a group of blue Kites, rejoicing around the dead bodies of a brown-robed human wizard and his cat.

...does any of this ring a bell?