The second most powerful country is actually no more than a very large island. Actually it is two large islands that are so close together and so conencted they are usually considered one. The entire island is covered by a very large city. Feltrest is located in the ocean south of Tyr. It is one of, if not the oldest place in the known world. Traditionally Feltrest and Tyr have been bitter enemies. However, after the Great War ended in the year 1000 they have been on friendlier terms. At least officially the governments of the two countries are allies. In reality this doesn't always occur. However, there has been no war and few skirmishes in the last 30 years.
Feltrest has a king and royal family, but he is just a figurehead. The real power is in the Council of Elders. Major nobles and guildleaders (who are often one and the same) are often the council members. Feltrest is controlled by the guilds. They have all the money and hence all the power. Guildwars are common and can be brutal. The government rarely steps in unless innocents are put at risk. Needless to say, the assasins guild it quite popular. Also, many adventuring guilds are based from Feltrest. People who are guildless are barely more than slaves
The city is very cosmopolitan so many adventurers or unusual races can be found here. The city is also on alot of trade routes especially from the south.
The people of Felltrest tend to show their Tyrian and Dalelander ancestry. They speak Fellstrade which is a common trade language in most of Kayliss. Most Felsborne are educated and tend to speak at least 1 or 2 other languages, often Tyrian or Zahkharan.
Feltrest is full of ancient tech and is said to be one of if not the oldest place in Kayliss. There also tends to be alot of black powder weapons. This leads to very little use of heavy armor and heavy melee weapons.
Feltrest does not have an army. They only have a Navy. The Navy is made up of regulars and irregulars or auxiliries. These irregulars often double as mercenarys, adventurers and occasionally pirates and privateers. During times of war Feltrest hires privateers to attack the ships of it's enemies. In times of peace they often hire themselves out to the highest bidder.