This is a brief walkthrough for the game. It will only cover main actions that you should do.
First, clear up the mess of Slimes in Vertigo. Don't proceed to the Dwarf Mines yet. It is simply too dangerous given your current level (which should be around level 5).
Next, take the suggestion by one of the drinkers at the Tavern. Go to Rivercity to explore. Rivercity is a much larger town and there are many different types of dangerous enemies. Clear up the Robbers first. Do not try to enter and defeat the Robber Bosses. Learn swimming here. It is the most important skill to have. Slowly proceed to destroy all the other enemies like the Sorceresses. Leave the Yang Knights last as they are the toughest-in-town.
When you have cleaned up Rivercity, teleport to Asp via the Mirror. There, kill as many of the Snake men as you can. You should also be able to kill the Guardian Asps and get the Crystals of Piezoelectricity. Return it to Falagar, who lives in a tent just outside Asp.
This is it. When you're out in the open, you can start fighting there. Constantly move to and fro the open land between Vertigo (on the East of Clouds) and Asp (in the Middle of Clouds). Try to complete as many quests as you can, and you will find that your level improves a lot.
Gradually, make attempts at the other 2 towns- Nightshadow and Winterkill. Winterkill should be slightly more difficult, as the ghosts are hard to hit. When you have won these two towns, move on into the icy lands. The enemies here are considerably harder than those in the forests, but they are still defeatable.
Keep on training. Then move to the mountains. The Barbarians should be rather hard, but there are tougher ones ahead. DO NOT attempt the deserts. Sandworms are very strong. Move to the volcanic area instead. When you are done clearing up the area (and nasty Lava Golems), move to the desert. The Sandworms should still be a big problem, but you will have to take them out slowly.
When the whole land is considerably empty, it is time to kill Lord Xeen. Get the Xeen Slayer Sword from Newcastle (which you should have already bought by now). Go to as many wells as you can to get the highest hit points and accuracy possible. Also, get as many Armour Class points as you can. Go to Darzog's Tower now. Climb up to the top and cast Levitate. You should be able to walk on the clouds.
There is one point (which you will have to find by yourself) where you can use the Teleport spell 9 steps. This teleports you onto a piece of cloud where Xeen's Castle sits. You will have to complete all the contests to get the Xeen's Cupid Doll. Enter Xeen's Castle. Destroy all the machines and monsters. Move up to the highest level.
You will see Xeen's pet Dragon first. Kill it with Implosion. It will take two Implosions to kill it. Proceed to challenge Lord Xeen himself. It is a contest of accuracy and swiftness. It takes about 3 to 4 blows with the Xeen Slayer Sword to kill him. Many of your characters would be either unconscious, dead, or even eradicated.
You will have to Town Portal back to some town with a temple. Although it is costly, the temple will be able to revive your characters. After that, you will have to fix all your items. Other than the Xeen Slayer Sword, characters who have been struck by Lord Xeen will have all of their items destroyed.
Now you have finally cleaned up the Clouds! There might still be some quests unfinished. You can either complete them first or move straight away to the Darkside...