The location of Backhill Village is not actually at the base of the mountain, but inside Skybreaker Peak.
As mentioned before, Skybreaker Peak does not only tower into the clouds but the entire mountain is made up of cliffs, giving it a sharp appearance. However, at the base of Broken Mountain Peak, there is a huge crack which splits the steep cliff walls in two from bottom to top, and Backhill Village is situated within this crack.
The village in the rift is surrounded by mountains on three sides with only one entrance and exit, which essentially serves as a natural barrier. Furthermore, they built a high wall at the crack in the cliff, making it feel as if the crack had been patched up.
As a result, Backhill Village became a settlement completely hidden within Skybreaker Peak. Unless the demons could break through the high walls at the entrance, they wouldn't be able to harm the villagers.
