Monreale comes from its earlier Latin/Italian name of Monte Reale, or Royal Mountain, from Roger (Ruggiero) the First's description of the place where one of his hunting lodges was found. Before that it had a Greek name, and I can't remember what it was. It was the seat of an archbishop (mostly to piss off the archibishop of Palermo 9 kilometers away) from the 8th century on.
The main "touristy" thing in Monreale is the Duomo, Santa Maria di Nuova, or the New Saint Mary's Catthedral. Build by William (Guigliemo) the Second in 1183, the Duomo is a wonderful, wonderful collection of different architectural styles that show just what a mellange of cultures existed in 12th century Sicily. The mosaics on the interior are without comparison, and the place is dripping with Arab influences in patterns and stonework. It's as if a bunch of folks who normally build mosques were asked to build a church. That's probably more true than not.
The mosaic cycle shows the entire story of the Bible from the creation to Revelations. Considering the literacy rate of the population at the time this was built, it made the most sense in terms of religious instruction. They are lovely in their primitive nature, and frankly they make me question why we really need perspective in art. These get the story across just fine.
Other than that, Monreale is a typical Italian city of about 50,000 people. The difference is that it is very compact...you can walk from one end to the other in about ten minutes. A city of 5,000 a few miles from Madison would take twice as long.
The main street is crowded every night for the passeggiata, where folks eschew television (and trust me, Italian television is really, really bad) for a walk with friends in the fresh air, to take a caffe' or cioccolato, perhaps a gelato, and enjoy the feeling of being part of a community.
Truly the best thing about Italy is the people. They are a friendly, gregarious bunch, and will share their stories with you if you but ask. Sure, it helps to speak Italian, but in the end, they're just happy that someone cares enough to take the transaction beyond "Here's your apples, thanks for the Euro."
We stayed in a couple of places, I can recommend both of them highly. One is the B&B Ciambra on Via Sanchez in the medieval quarter of the city. Run by the Signora Barone, it is clean and cheap, and la Signora is a funny old woman with a great sense of humor.
Via Sanchez, the Medieval Quarter
The other is the B&B Elvira al Duomo, just a few hundred meters southeast of the Duomo on a quiet side street. The family lives downstairs and there are four rooms upstairs, again clean and inexpensive. Run by Santino and Elvira, the E. al D. is a great place for families. They became friends after a few days and we had some great times (I bought pizza for the family the last night we were there and it was wonderful).
If you want to see Palermo, I'd advise you to enjoy it from a distance (about 9 kilometers should do it). There's a bus that runs from downtown Monreale to downtown Palermo, saving your sanity (and your mirrors) rather than driving in the bumper car ride that is Palermitan traffic.
Of course, I drove, but I bought the extra insurance and wanted to get my 70 Euro worth of door dings and mirror kisses. I did. It was actually sorta fun, but more than once I said to myself "I am so glad my wife is not here; she'd have a stroke."