Princess is representing the Earthlings.
It's a climax after a political clash of the two races.
Crusty and the princess' relationship is... hard to explain. I'll just leave it at it's adorable.
As for crossing servers, you just walk. or swim. or fly. Like real world.
The physical location of data may move servers, but players won't really notice until they open their status screen or try to call a friend.
The transition is seamless. (Just like most MMO these days, which can transition seamlessly to another server)
As you can imagine, natives being real humans play a massive importance in the story.