I understand the effect they were going for with the backer stories, the way I see it is that you are walking down a street and you catch glimpses of some people's souls without necessarily interacting with them. The issue for me is that the writing often feels of lesser quality in these, and the stories are often too short to offer anything really interesting. More importantly, the stories I have read so far never add much to the lore of the game, as opposed to all the books you find for example (which I can't get enough of by the way), and that's my biggest gripe with them.
All in all, I have stopped reading them once I got to act 2 and they really are easily ignored, not much of an issue for me but I can see why some would like an option for them to be removed.
I must be missing something really obvious... but how do I craft in this game? Upgrading my keep doesn't seem to unlock any crafting stations and such?
You can craft meals and potions by going to your inventory and clicking the craft button in the bottom of the screen right next to your stash icon. You can also enchant your weapons and shields by right clicking them in your inventory and clicking the enchant button in the bottom right next to compare. You can craft at any time as long as you have the resources for it, no need to go to a merchant.