The empire apparently moved capitals, whereever the emperor was.
From that same dev blog:
"The capital moved from place to place, and the assembly of the people was called wherever the emperor desired. In practice, this was usually an army camp where his veterans could be relied upon to shout down any opposition."
And Lycaron was where Arenicos's palace was located:
"And then, returning to his palace in the southern town of Lycaron after his latest victorious campaign on the borders, "
It doesn't make a lot of sense for there to be a moving capital (a capital is the most important city, not the same thing as the seat of government) but it's a video game, so whatever. It's still an open question what settlement the Calradoi originally arose from, which may not necessarily be Baravenos if the capital actually did move around that much -- but who knows?