Mostly optional. But "developing an imaginary setting that is coherent and possesses a history, geography, and so forth. Perhaps creation of maps, listing the back-story of the area and the people of the town and castle, amongst other features" for your 3 square mile area of land and its environs. There isn't a ton of "zoomed in" info for the vale of Arryn and the mountains of the moon. so we have a lot of leeway so if you guys think of something we shoud be able to incorporate it.
If we just want to develop this as we go I am all for it. We will probably just need to keep track of it, by listing it with any other relevant information