Wyv,
From the manual:
You do not need to save the game when your characters are in town, they are automatically recorded for you, and the world is preserved exactly as it was when you re-entered town. You can return your characters to the Inn, or you can simply quit the game and they will be returned to the Inn for you automatically. The next time you start the game, you can go to the Inn and they will be there waiting to begin their adventures once more.
frostg1ant,
This should by no means be mistaken for an actual game save, but rather a way to quit the game while you are in town and return to it later.
Moni