Minecraft wiki entry for Settlement_guide, associated text: It is best that you choose between three main types of settlements: villages, towns and cities. There are also other types suggested like hamlets, boroughs and conurbations. However, it is up to you how you distinguish them. It is easier to start by building your house. Then, you can build a house for a neighbor, then a neighborhood, then businesses, and gradually expand to a village. This can then expand to become a town and even a city.