I'm by no means an expert, but if I were to make my own RPG, here's how I'd do it:
Step 1. Main storyline/Main quest/Plot
Write a story that the game will lead you through. The more detailed, the better. It should include what the player will have to do to complete their main quest, what other characters they will encounter on the way, etc. Don't make it too long or if you do, try to keep it interesting.
Step 2. Background/Setting
Invent a world in which the story takes place. Once you have an idea of the main story, you can lay down the broad lines of the map your character will be exploring. For example, if your story features a gargantuan spider lord who terrorizes the island's inhabitants with his spider armies, you'll probably need to vanquish him or chase him away from the island to restore peace (probably a crappy idea for an RPG, but what do I know
). Then the spider lord will need a hideout like a perilous dark forest or a stronghold in the middle of the same forest. Now, you'll know you'll need to devote a section of the island to this forest. Much better than trying to figure this out only after you've built your world!
Maybe write the history of the island. If you envisage a town that was recently hit by an earthquake, you'll place some ruins in the town or maybe there's a wide rift, dividing the entire town in two.
I'd suggest taking a piece of paper and sketch out your world. Doodle around until you have something you can work with.
Step 3. World building
With the basic idea of the map and the story in mind, you can start building the world in the editor/engine. Create a vivid world that feels alive. Bustling towns, misty mountains, bountiful plains, you name it. If you made up some history for your world, it won't be difficult. Let's say there's a small village that sustains itself by chopping down trees and selling the lumber in a town nearby. Then you'll maybe want to create large clearings with plenty of tree trunks near the village and have NPC lumberjacks in the neighboring woods.
Step 4. Quests
Make the main quest first, then the side quests (if your game has those). NPCs, monsters, scripting, all that.
You can always tweak or modify your game later, but I'd say these are maybe the first steps of game development. I don't know, though. Hopefully Redshift will give you a more professional answer.