Swordmaster - That's pretty much it regarding the urban areas. However they'd be more like the less dense kind of forests. For example armies can move in and out of them. The different urban tiles would not be settlements in their own right. The idea would be to have a cluster of these "urban tiles" surrounding an unwalled central town piece/tile (this would be the settlement that the player interacted with).
Also, pertaining to the indestructible walls: I agree this is a big issue! Thanks for pointing it out! Considering that campaign pieces can change their appearence (though not roads, I grant you), ports blockaded (but I don't think this has a battle map representation), volcanoes erupting etc. then theoretically you could have walls which could be destroyed and have another model for certain sections. Also, another dynamic effect on the campaign map which you may have nnoticed, is when an army is in a position for a long duration the ground around them becomes scorched, this could be another way to have walls destroyed (though I am now just clutching at straws).
On another matter - make sure to check back on my previous posts (particularly those on new models and settlement details!).
Anyway thanks for the continued interest Swordsmaster!
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