From 710 to 784 the capital was at Nara. After a short stay in the suburbs, the capital was moved, in 794 A.D., to Heiankyo (a.k.a. Kyoto) which was to remain the imperial city until 1868. The Heian Period didn't make it that long, however. It and its culture fell victim to competing samuarai clans during the twelth century.
In many ways, the Heian period is the good old days for Japan. Culture and refinement were everything. The ability to compose a good poem and a good hand at calligraphy were essential aristocratic skills. No self respecting lady would be seen without twelve correctly coordinated and layered kimonos. Of course, letters and even food had to follow the proper form and contain the proper reference to the season and the weather. In short, form, appearance and decorum were cardinal virtues. As boring as this might sound, the Heian period was the first of several cultural high points in Japan. This is almost painfully obvious in literature. Because Chinese characters were believed to be too hard for women to learn, the women were forced to use some simplified kanji phonetically as an alphabet. These letters allowed them much more freedom than the constricting use of Chinese. Ironically, although the ``superior'' men did write some world-class poetry, a few women created masterpieces of world literature. The most important person to know in this regard is Murasaki Shikibu--she wrote The Tale of Genji, one of the first and longest novels in the world. She wrote it around the year 1000 AD and it is about 1,000 pages long. It deals with life at the court and the love affairs of the Prince Genji and his friends and family. Most Japanese high school students enjoy it about as much as American high school students enjoy Shakespeare.
The continental culture which came flooding in during the Yamato period, continued to come into the islands during the Nara and Heian periods. Of course, the Japanese changed it, adapted it, and generally made it their own; Chinese culture became Japanese culture. A major reason that the court aristocrats were able to so completely dominate the culture of the era is simply because they had a monopoly on it and they did little to try to spread it to other classes. The only other theoretically powerful group, the samurai, were off in the hinterlands fighting the Ainu. However, by pushing the Ainu east and north, the samurai opened up new lands which they used to build up their own power. Nobles and monasteries already possessed large estates of tax-free land and when the samurai began to acquire their own, they used their wealth not for religious purposes, but to maintain and enlarge their armies. Two families became exceptionally strong and ambitious: the Taira (also known as Heike) and the Genji (a.k.a. Minamoto). They fought for supremacy of the sacred islands during the early 1180's. Minamoto Yoritomo finally defeated his Taira rivals, but rather than overthrow the emperor, which would give everyone, friend and foe alike, an excuse to exterminate his clan, as well as removing any legitimacy he had to rule, Yoritomo compelled the emperor to accept his services as Shogun. This was in 1185 and Yoritomo's base camp in Kamakura became the actual center of power in Japan. The era of the cultured aristocrats was over and they would never again possess any real power.