The character sheet was merely a suggestion to at least have some frame of reference. If in a best case scenario it is a multi-generational game, we may need them since each of us could have dozens of character, it also allows a tier of things to allow for "rank progression.

However in tabletop games I loathe rules, but they are invaluable to allow for management of multiple characters which well... there is not an insignificant chance of that possibility occuring.

Regarding your questions: 

As a launching point I think it might be best to start in One village, and then if we move out or what not then we expand.

In regards to influence on the plot, I would prefer a more sandbox approach, as it allows for more wide variety and other plot cropping up eventually.