Hey Omri
Sorry for taking a while to get to this.
There is a lot that goes into the labelling of a map, for me at least.
There are some 'rules' to typography that many follow and you could read on those if you are interested.
I do not really follow those. I kind of go my own road.
In those rules it talks about never using more than 3 fonts. Using such and such fonts style for this and that thing.
For me, I try very hard to not use more than 1 font, with the exception of an extra display font for a title maybe or custom lettering for a title. I just find that most things can be properly achieved to great effect with just 1 font.
Thus choosing the right font for your project is crucial.
This is where there is a bigger issue for the non-professional. As a professional illustrator and sometime graphic design person I spend money to buy licenses to professional fonts sets. That allows me to get some very good and very appropriate fonts that are not available for free. It also allows me to use my work commercially in all contexts. Many free fonts are only to be used for personal work, if you check the fonts license, which is always important to do.
Therefore, I have a large collection of fonts at my disposal. That being said, I did not always have so many fonts.
There are now a decent number of fonts you can use commercially for free. Check Font Squirrel and Google Fonts
As to what fonts I do choose....
I try to pick a font that conveys the age or time period feel that I am trying to create.
I also consider how much text and labeling I will have and what sort of text.
If the amount is low, i have a bit more freedom to choose a font. If it will be a larger amount of text, then I feel inclined to pick a font that is going to be readable at smaller sizes, as i will likely have to use smaller text to fit it all in. Readability is very important. I also like to make sure that the font works well with a small stroke effect at a small size, as that tends to be one of my preferred techniques and is used often to make text read better next to certain backgrounds and over images.
As to text effects on your labels....
opinions on these vary. the right effect, to me, depends on the situation.
It is always best to use no effects if it is possible. Text is always cleanest with no effects.
But many times an effect is needed for the text to stand out over the map/image it is sitting over.
In some cases a glow effect will help to make text stand out, but it is not always enough.
Sometimes it is better to go with a stroke effect. The amount varies upon many factors like size of text, strength of image under the text, etc.
As regards placing text labels....
there is a lot to that art. i try my best to avoid text on a curve, if i can help it.
Text on a curve is appropriate many times and does look good, but is time intensive and can be a true pain in the butt.
There are some ways to fake the look of text on a curve and I did use some of them here in the Chiezbehrg map.
I am not sure if these techniques are available outside of Photoshop, which where all of my text labeling is done.
Maybe someone can say if they are similar.
I hope some of that helps. If you need to know something more specific, just ask.
I will be trying to get an update today about the dungeons and such.
so check back later.