RogueBasin is devoted to Rogue-like games (e.g. Rogue, NetHack, ). All of those games were based on a simple square grid. The site has an extensive section on developing games like that: http://roguebasin.roguelikedevelopment.org/index.php?title=Articles
You will find both suggestions and code there which could be used to build a game like you describe. After all, the only real difference between Rogue/Larn/NetHack/etc. and Diablo or the Ultima series is using simple text characters to depict the map and gameplay vs. isometric sprites.
In particular you will find information about calculating the area illuminated by a torch or lantern the user is carrying, data structures for storing maps, algorithms for automatic generation of maps, and lots of notes for how different games which have already been written chose to address these problems.