Settlement levels and their requirements:

Level 1: Recently founded - small watchtower

Level 2: Outpost - 3 watchtowers

Level 3: Tiny town - 4 watchtowers and a townhall

Level 4: Medium Town - 8 towers, a tavern and level 2 townhall

Level 5: Large town - 10 towers, 2 taverns and level 2 townhall

Level 6: Small city - 12 towers, 2 taverns, barracks and level 3 townhall

Level 7: Medium city - 14 towers, 2 taverns, 2 barracks and level 3 townhall

Level 8: Large city - 16 towers, 2 taverns, 2 barracks and level 4 townhall

Level 9: Huge city - 20 towers, 4 taverns, 4 barracks and level 5 townhall

Level 10: Metropolis - 40 towers, 8 taverns, 8 barracks and level 10 townhall