Inside the walls of Cyseal, you should able to make some little quests, which will give you some XP. Don't go out until you reach level 3, have a party of four characters (unless you have chosen Lone Wolf talent) and buy or "acquire" some decent equipment.
As a general rule: if you see a group of foes with level greater than yours, turn back. If the foes has the same level as you but the group is very large (more than six), or simply, if you try different strategies and always get killed, turn back and try another route.
If there's no routes left, perhaps you are missing something, such a little button or a hidden hatch. Open every chest, barrel and box. Speak to everybody, al least to the guys that have a name. Pick the talent Pet Pal and speak to animals. Talk to every rat: many of them will tell you useful clues. Press ALT often (to see objects), specially after a battle, and very specially if there were bosses in the battle.
