If you completed the quest Woe to the Vanquished in the Prologue and refused to take any payment from the peasants, you can encounter the peasant family you saved here in the Flotsam town square. Approach the building directly across from the entrance to the Blue Stripes headquarters, near the wooden door that leads to the Craftsman’s District. This automatically triggers a cutscene where the peasant family approaches Geralt and offers him 50 orens, a reinforced leather enhancement, and the diagram of the heavy leather jacket in a display of gratitude. Whether you accept this offer or refuse it results in slightly different text in Geralt’s in-game journal. There’s no XP bonus for refusing the reward this time, so it’s more lucrative to accept.
Just beneath the staircase to the entrance to the Blue Stripes headquarters is a randomly named NPC. Have Geralt approach the NPC and strike up a conversation. Listen to the message, then accept the package you’re offered. It contains the book The Arachasae—A Study and formulas for dancing star and dragon’s dream bombs. All of these items can be very useful to you in resolving future quests.
Near the entrance to the Nonhuman District (just to the right of Merse’s office), there’s a pair of NPCs speaking together in hushed tones about you. Approach them and begin a conversation to trigger a cutscene. The NPCs say that they’re scientists testing the long-term effects of a new substance and want to know if you’re interested. You can turn them down, but if you accept their offer they give you a free critical effects mutagen.
The first time you try to exit the town square through the archway into the Craftsman’s District, you’re going to be attacked by three bandits. You can attack them freely, but just make sure you don’t accidentally set foot back in the town square during the fight. The bandits aren’t heavily armored, so you should be able to put two of them down with light attacks and maybe Quen for extra defense. The lead bandit carries a shield, so you can handle him by blocking and countering. The lead bandit drops an arrest warrant upon defeat.
Harbor
The Flotsam harbor area begins to the north of the inn and extends along the entire north side of the town, adjacent to the Craftsman’s District. The main thing you can do here is, well, pull lots of random loot off of cargo. You visit this area a few times as part of certain main quests later in the game. The dock farthest to the west leads to the prison barge.
Past the dock area, in a wooded area just beyond, is a bloodstained cave entrance. This cave is infested with nekkers, so you don’t want to visit just yet. You’ll come to this area at least once later in the game, though.