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The mobs I encountered could be group into two categories: pigs and sheep are farmyard animals, while foxes and boars are woodland animals. These are just what I saw, but as it stands not compelling things to fight.

I followed the floating crossed swords icon, but I could not find a boss; I am going to assume there are no bosses yet, or crossed swords don't represent the location for a boss battle.

Purposefully collecting items and leveling up are just grinding/busy work, and in classic RPG sense this was a way to space out story events. As I take it the point of grinding here is to improve your odds in boss battles.