The Urban Grid
Building a settlement is no small task. To abstract that complex scenario into a usable system, we use an urban grid. While the urban grid represents a settlement as a square, if it helps your verisimilitude, you may choose to create a more appropriately laid out map. The grid divides a potential settlement into 9 large districts, or blocks. Each block has 4 plots in which you can Build Structures. Though the urban grid depicts 9 blocks, the number of blocks you can use depends on the type of settlement, as described in the table above.
Urban Grid Borders
The four sides of the urban grid are where you record the types of borders the settlement has.
Land: This is the default option, representing a normal and unremarkable transition from urban area to hinterland.
Water: When you place a settlement in a hex with a water feature such as a river, lake, or swamp, you can locate it so that it has water borders; the number of possible water borders is at GM discretion. These borders provide natural defenses during war, and some structures can only be constructed on lots adjacent to water borders. However, navigating water borders that lack bridges takes a long time and you incur a cumulative -1 item penalty for each settlement in your kingdom which has only water borders, no bridges, and no pier, harbor, or port.
Walled: Building Walls on your borders boosts your settlement's defense during certain events and war.
Settlement Types
Your initial settlement is a village, but as your kingdom increases in power (and level), a settlement’s type can change, providing different benefits and costs to your kingdom, as detailed in the table above.
Village: Settlements start as villages, consisting of a single block of 4 lots. You may choose any of the 9 blocks on the urban grid to begin in. When you Build a Structure in a lot, you must select a lot in that block.
Town: When a settlement has all 4 lots on its initial block filled, as long as it is not Overcrowded, you may begin building on lots adjacent to the filled lot. A town may consist of up to 4 contiguous blocks, although they don't have to be in a neat square.
City: When a settlement has at least 2 lots on 4 contiguous blocks filled and the settlement is not Overcrowded, you may begin building on lots adjacent to any filled lot in the urban grid. A city can consist of up to 9 blocks, an entire urban grid.
Metropolis: When a settlement has at least 2 lots on all 9 blocks filled and the settlement is not Overcrowded, you may adjoin a second urban grid, connecting one border of each of the grids. You may then begin building on lots adjacent to the connected borders.
Required Kingdom Level
These entries capture the minimum kingdom level at which you can expand a settlement to the next type. For example, you cannot expand a village into a town until your kingdom is at least 3rd level. Your capital is an exception to this rule; it can expand to a new settlement type as though your kingdom were 3 levels higher than it actually is (thus it can always expand to a town, and can become a city when your kingdom reaches 4th level).
Settlement Level
A settlement's level is equal to the number of blocks that contain at least one functioning building. The settlement's level is used to determine what kinds of jobs are available there, as well as the items generally available for purchase, although many buildings improve the availability of specific types of items or jobs.
Size
This indicates the maximum number of blocks a settlement can occupy in an urban grid.
Population
A settlement's exact population is intentionally left abstract, but this should give you an idea of the kind of population density you should be imagining.
Consumption
The Consumption of a settlement is the number of Food commodities the settlement requires each kingdom turn to remain functional. The number given here is the standard, but certain structures in a settlement can increase or decrease its Consumption.
Maximum Item Bonus
Many structures within a settlement grant an item bonus to specific kingdom activities. Normally, multiple item bonuses do not stack, but the entire settlement is considered a single "effect" for this purpose, with the individual structures inside it stacking up to this limit.
Influence
A settlement's area of influence is the region in which meaningful economic and productive activity can occur, as well as the area where the settlement's beneficial effects extend. Thus, a village influences only the hex it is located in, while a town influences all adjacent hexes. Hexes connected to a settlement by roads or navigable waterways are considered to be only half as far away, rounded down (thus even a village can extend its influence one hex away along a road). If a settlement has only water borders, with no bridges, pier, harbor, or port, its influence is always 0, regardless of any other considerations.
Your capital is especially important to your kingdom. Its influence is always increased by 1 hex beyond a normal settlement of its type, unless it's on an island or otherwise incapable of spreading influence.
Certain activities are limited to a settlement's area of influence. Structures in a settlement that provide an item bonus do so in all the claimed hexes within the settlement's area of influence.
Hexes outside the borders of your kingdom are never considered to be within any of your settlements' area of influence, even if they would otherwise be close enough. A hex may fall within the influence of multiple settlements, although the bonuses provided by separate settlements typically overlap rather than stacking.