Even with a warning, Cain suspects that at least one of the Guards might have wet themselves when the pair of Divine Fire Dragons appeared. These are copies of the enormous red-scaled beast that guards the entrance to the dragon-filled dungeon in the Blood Sands Castle. That dungeon is still walled off since the dragon at the door is over level 400, but he is of Legendary quality, and Cain can at least summon a copy of him now.
Once the dragons appear with an echoing roar, the entire area around the village gets suddenly silent. Not just the wildlife outside, the residents all disappear into their homes and turn out the lights, afraid of annoying the mighty beasts. After a few minutes, they realize that the village isn't under attack, but that still isn't enough to risk wandering about at night. For the most part, once the sun goes down, so do the locals.