Like I said: Imagine whatever non-simulated scenario you think fits best. Myself, I think it makes perfect sense that Dwarves know about distant lands through deities they worship, with the player taking on the role of one.
I think how they know needs to be simulated at least a little, not just hand waved.
There have been several simulation games published over the years in which the player takes on the role of a god. Populous and Black & White are just two examples. How does the deity that the player represents convey their wishes to their followers? I don't believe such games simulate that. And I really don't think players care. "It's F'n Magic" is as good an excuse as any. I think it's safe to say that most players either don't dwell on it or they use their imagination.
You do know that there will be a magic setting right? and that if you set it to "none" there will be no magic and no dwarves, at some point human hamlets will be playable in magic-less worlds, this mean that the game will need to be able to say how they know and not just that they know, and if it can do that for humans then it can do it for dwarves as well.
The hows and whys of magic are part of the reason why there will be a myth generate in the first place, and if magic is set to "none" then the myths the myth generator writes will be false and presumably that means their world formed roughly like ours and little explanation will be needed, but if magic is set higher then the magic of the world will have rules and not just be hand waved as "MAGIC".
I must ask, why do you think that magic will be less detailed then other aspects of DF?
NOTE: While I love the black and white games they are not comparable to DF in terms of depth of simulation.
Is it a simulation first and a game second? Has Toady answered this question before? If not, that's a good question to ask. If being a simulation is more important than being a game, does this mean that playability is to be sacrificed for the sake of making a more realistic simulation?
Unfortunately no.
In some sense, "gameplay", whatever that means, must always win. But it becomes a blurry concept with realism when you think of different moods you could be going for, and we vaguely slant realistic most of the time.
Well I was wrong, which is not that surprising really, but I know that if personal quantum computers where available I'd want the individual grains of sand to be simulated, that would be detailed and awesome.