In the next version you will be able to create two characters to test the interactions between humans, but not in the final version, you will have control of your own character, and then there will be mechanics that will allow you to customize other characters.
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No, there are always limits, the maximum number of inhabitants in the game may be more or less depending on the hardware resources that each of them consumes, for now all the mechanics for the end game that I want are designed to be fun and dynamic to play with a few characters on your island, but you will be able to change the look of them, and even store favorite looks, import other people looks, or export your own.
However, the whole game is made under the idea that it should be easily expandable, so if I got a good performance, I would work on an update that would add some small town, I love small levels full of small details.
But keep in mind that this is planned for updates that will be a long time coming, and for now it's just an idea, there's still a lot of work to do.