I noticed that the higher tiers offer features like C extensions, but what exactly does that mean in terms of what can be done with just the base version? For example, I'd be wanting to make primarily top down life sims and games that focus heavily on dialogue, conditional branches, exploration and little if any combat at all.

C Extensions are useful for doing OS specific integration. The game you’re describing doesn’t seem to need that kind of customization.

These sample apps give a deeper dive into what you can do with C Extensions: https://github.com/DragonRuby/dragonruby-game-toolkit-contrib/tree/master/samples/12_c_extensions