The Conan d20 RPG has an interesting system of making settlement type independent of population size. Mechanically it really doesn't make any difference, but like Allegiance, it is a very useful storytelling tool to make the world come to life.

Deserted|2-10|25-100|250-1,000| >2,500
Very High|80-200|800-2,000|8,000-20,000|(>80,000*)
*Do not exist in the Barbarian Lands.

A settlement of 300 people can be an overcrowded hamlet, low population village, average village, high population village, and deserted town based on the infrastructure of the settlement. A village with housing space for 500 would be half empty. One with housing for 200 would be extremely crammed.
The settlement catogory indicates the infrastructure that would support an average sized population in normal times.
The population density indicates how well the infrastructure can support the population.
A density above high means the demand is greater than what the existing infrastructure can handle. A density below low means that there are not enough people to maintain the infrastructure

Settlement Category
Hamlet: A hamlet is a small cluster of farms that usually is home to 10 to 100 people and can often be found within a hours walk of a larger settlement. Farms usually band together for protection against bandits and to maintain shared irrigation canals or a mill, which would not be possible to build for a single farm, and very often neighbors help out when one farm needs additional help because of a case of illness or injury. Hamlets have neither a formal government, nor any stores, but travelers might be able to stock up their food supplies or use a small forge to repair broken equipment.
Village: Villages have populations of 100 to 1000 people and usually form the heart and center of the farmsteads in the surrounding area. Most villages have a formal elected representative but major decisions are still made by common consensus of the farmers. In the center of a village, one will usually find a tavern that often has a few small rooms to rent to travelers, a blacksmith, and a store that trades in all the goods that farmers often need but don't always make themselves, like ropes, pitch, wax, oil, cloths, buckets, pottery, and so on. A shrine to the local spirits of the land can usually be found at the edge of the village or a short walk of a few minutes away from the village itself. It is very rare for a shrine to be located among the homes of the villagers.
Most villages have a militia of about 20 to 50 men who are trained with weapons and often also have leather armor and better. Larger villages may have an experienced warriors as a constable who deal with brawls and troublemakers, but usually it takes up to an hour to get the militia assembled in times of danger.
The largest villages are often the seat of the local sub-chief who rules over the surrounding lands. While he and his warriors usually do not work in the fields, most own very large farms that can be home to more than a hundred people, including the sub-chiefs extended families and his servants and slaves. In more dangerous regions, his own is often a small hill fort right at the edge of the village.
Town: Towns mark a significant change to the life that most people in the villages know. Ranging in size from 1,000 to 10,000 people, the society of towns is decidedly different from life on farms. While virtually all towns are surrounded by dozens of villages and hamlets within a days travel, there are generally no farmers living inside the towns at all. Instead they are home to craftsmen and merchants, as well as the people supporting them, like innkeepers, scribes, physicians, alchemists, and musicians. Since the thousands of faces offer a certain degree of anonymity and there are always large numbers of foreign travelers passing through, towns are also home to thieves and other criminal. While outcasts with no clan affiliation never find welcome in villages, towns at least tolerate their presence, though they are usually among their poorest inhabitants. Unlike villages, towns have their shrines usually within the settlement itself, mostly out of purely practical reasons. However in most places, it is customary to have the shrine grounds to be surrounded by a wall at least 10 yards from the shrine building away, which makes the shrine still clearly visibly separated from the rest of the town. In some towns, there is also a temple to one or several of the greater gods that are held in high importance by the clans people.
Towns are almost always entirely surrounded by wooden palisades and more often than not have a solid stone keep, which is the home of the local chief or a particularly powerful sub-chief. Towns also have standing armed forces consisting of the lords warriors. In many cases it is customary that there are two or three trusted veteran warriors who maintain the peace inside the town with small groups of hand picked warriors under their command, while the rest of the warriors patrol the surrounding lands and guard the keep.
City: The city is by far the rarest type of settlement and there is only a small handful of them in all. Cities are quite similar to towns in many respects, but often of a significantly larger scale and several times bigger. Home to tens of thousands of people and destination of dozens of merchants every day, and usually being the center of great kingdoms, even clan affiliation holds a much less important role than it does in any other places. Unless there are specific feuds between clans, people are mingling with each other regardless of race and without caring for each others clan. Most cities are governed by councils composed of its most powerful inhabitants. Often the local heads of major clans, but also merchants who have made it to incredible wealth without powerful supporters behind them. While clan affiliation plays a relatively minor role, people are still very much aware of social status, and it makes a major difference if you are one of the rich merchants and nobles, the craftsmen and shopkeepers, or the poor workers and beggars. Quite often, a persons wealth and sophistication becomes even more important than in the towns and villages, as some would rather forsake their fellow clansmen than to risk their reputation among the powerful of the city.

Population Density
Deserted: This settlement is basically abandoned and the few remaining inhabitants can no longer maintain the infrastructure. Even though it still has the size of a city, treat it as a settlement one category lower.
Sparse: These settlements are struggling to keep their infrastructure maintained and sometimes entire sections are falling into disrepair or are already collapsing. Many of the goods and services one would expect from a settlement of this category are no longer available.
Low: Settlements of this type have a lot of open space and a number of vacant buildings, but its people are still able to maintain the infrastructure and services that one would expect of a settlement of this category.
Average: The average size for a settlement of its category as one will find in most places.
High: Building space is scarce and accommodations often small and expensive, but otherwise these settlements have no major problems with supplying their people with necessary things and keep business running as usual.
Very High: Settlements with such a dense population are at the limit of what they can handle. Housing and inn rooms are hard to find and at times it can be difficult to get enough food for everyone.
Overcrowded: This settlement has been flooded by protractors or refugees. This status is usually only temporary and the number of people will either go down again after a short time, or the settlement will adopt to its new size and move up by one category.