Time progresses only when you select dialogue options. Each line of dialogue advances time by 23 seconds.
There is no timeline of events that you must adhere to. Take the time to explore the game and enjoy it fully. There’s no need to rush. The characters in-game may urge you to hurry up, but you don’t actually have to.
Revachol works on a schedule. At 9 PM (21:00), you can end the day by going to bed. Most NPCs are gone (i.e. not at their usual locations) by 10 PM (22:00).