He talks about the wars in the Colony of Maztica. It's tied to the the Forgotten Realm Novels where the colony tries to get it independance over Amn If I remember correctly. Amn sent over troops to secure the colonies plus Priest of Helm (that action has lowered the guardian god's worship) in the hopes of regaining control of them. anyways like it's been mention above it has no real bearing on the game save put you in the mind set of the Amnish people.
It's like in BG1 where the guy in the docks tells you the world is round and there are lands to be explored past Kara-tur.
About Gating Demons I did it and never lost rep for the rampage it causes nor gain experiance from it's kills.
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