Some recent inventions, especially the heavy plow, allowed people to settle and colonize otherwise unfarmable land. A population boom in the 12th century started pushing people out of overpopulated villages and deeper into what had been the margins of settlement.

Medieval lords naturally saw this as a lucrative opportunity, and with the backing of the Church, who saw this as an opportunity to Christianize untamed and therefore sinful land, new towns and villages were chartered and settled by peasants seeking new opportunity (and tax breaks) in these new towns. This is why so many towns across Europe are literally named "Newtown" (ie "Newton", "Novograd", "Neuville").

Land would be cleared, trees cut, houses built, commerce established, and demons driven out and blessed by priests. This game is literally about this process. Or at least the economics of it.

If you're familiar with the Manorial system, then you're familiar with how a king delegates to Barons who delegate to landed gentry who delegate to peasantry.

Settlements follow this hierarchy. A city, which in Western Europe at least is defined only as a town with a Cathedral that is to say has a Bishop, is at the top of the hierarchy. It's in turn supported by large villages, which are supported by very specialized smaller communities and camps, like mines, quarries, foresters, and charcoal burners.

The distinction of cities in the Middle Ages is clear if kinda weird, but Towns/Cities vs Villages is murkier, and is the subject of a lot of spilled in. When does a village become a town? Most distinctions are either too broad, too narrow, or too academic, but I think a useful one is that Towns/Cities support intellectual labor and the new Middle Class. Law firms, guild halls, bankers, money changers, professors. Villages primarily support agricultural and extractive labor like mines and farms. I don't see any indication in this game that there will be any mechanics built around the Middle Class

By an accident of landscape, economics, and human inclinations, these hierarchies tend to be pretty evenly spread out across the landscape. You can read more about what is called Central Placement Theory[en.wikipedia.org].

This game does tend to reflect that. Limited upgrades to a town means it's better to specialize a settlement to focus on whatever resource is abundant, and importing the rest.

• Create farming hamlets that send grain to the main settlement, and export/barter the excess
  
• Workers camps near the rich resource
  
• barter and trade networks that plug the the main settlement into the broader commercial network.
  
• Invest your tech tree's few points into 1 branch that matches your rich resource to ensure the highest degree of productivity.
  
• One farmhouse takes a lot of support, so I would spread two hamlets of 4-5 houses and place one farmhouse equidistant to ensure that the hamlets don't get too dense and become villages themselves.

In archaeology, there are essentially two kinds of buildings vernacular and monumental architecture. Broadly speaking, monumentality is loosely defined as a building which has a symbolic purpose as a major part of its function, Churches, Temples, Palaces and so on.

Vernacular architecture is everything else. Their function is largely practical (which does include a lot of symbolism) and includes houses, barns, granaries, and warehouses. The game actually lacks a lot of monumentality at this stage beyond a couple churches, your castle, and the road shrines. I wouldn't mind seeing more guild halls, market halls (maybe fewer merchants but higher capacity? Or as the only place to buy level 3 goods?).

• Churches tend to be oriented to the East, and they tend to be situated close to marketplaces and commerce, but rarely are they center stage. They will also be established at the road near the entrance to the town, so that more remote peasants have access as well as demarcating the entrance from wilder-land to civilization.
  
• Manor Lords does a great job of presenting Medieval Lots and Long Houses. Stone footing, large timbers and mortise and tenon joinery with the spaces filled in with wattle and daub. The lots are long and narrow, and most of the time as much of the land was put to economic use as possible. This is by far my favorite feature of the game. It eschews the modern paradigm of a separation between industry and housing, which we have inherited from our familiarity with 20th century zoning laws.
  
• Stone houses are missing, but if we can ever upgrade townhomes to Level 4, I would like to see some of them be entirely stone. Timber framed buildings with cantilevered 2nd stories that extend beyond the entrance are also missing, but maybe that wasn't a characteristic of townhomes in this region at the time.
  
• Industry was largely divided into smelly and not smelly. Bad odors, or miasma was thought to be a major vector of disease and misfortune so Tanners, Potters, Blacksmiths would generally not be allowed to do their work in town, but most other types of industry was allowed to take place on your property as space allowed. There is an "odor" map overlay feature in this game that isn't implemented so I do expect it to matter more in later updates.
  
• In Europe, winds prevail from west to east, and so industry tends to be on the east side of town, and elites homes and town administration trend towards the western side. This is true today as well. Look at your town map and often you will see the factories and poorer communities located to the east and more affluent neighborhoods to the west. Unless there's a coast that rich people want to get a view of, modern communities still favor putting industry downwind.
  
• I hope to see market upgrades at some point. Open air markets are good, but that's only one type of market. Markets could be both covered (increase storage capacity), and independently owned shops of course for those level 3 artisan houses would be incredibly welcome.
  
• Buildings missing from the urban fabric: Hospitals, monasteries, convents, chapels, bath/♥♥♥♥♥ houses, butter crosses (ecclesiastic markers of markets). Of these monasteries would be very welcome and could fit the rural character of the game.
  
• There are lots of monasteries in medieval towns, but certain orders built in the countryside, so it would be interesting to establish a monastery in one of the "counties" and had to follow a different path to upgrade the monastery to support an Abbot or Prior with imports, wine and candles, foodstuffs, and export books, rabbit meat (suckled rabbit was used during Lent since the unborn wasn't considered "meat" having only existed in the water of the womb).