I'm not the OP, but I think that's a fantastic idea for the setting. Something should make the capital vitally important, whether it's a religious significance or mineral deposits or the presence of a convenient harbor/river for trade. And something should keep the kingdom limited, like a large swath of desert, or orc territory along the border, or something like that, so there aren't too many cities of significant size, because you do want to keep the playerbase all in one area most of the time. Since it's a pretty small kingdom (a 1.5 week travel radius is not that huge in a medieval world with limited roads and rough terrain) that probably has a small military, it might even be a protectorate of some larger foreign empire... that would allow people who need their characters to be from a foreign kingdom to create one that's far across an ocean and less likely to affect your setting. There are a lot of cool things that could be done if you want to get really realistic about it.

Of course, a video game-style world that includes all of the fantasy elements would be fun too. It doesn't have to be super realistic.