Salem

I got a completely flat area (some 9x7), but is unable to build even the smallest Pilgrims Hovel on it ... it merely comes with a very unhelpful message that "you cannot build that here" ... why?

if you're building in the forrest, you'll need to remove any grass. even tho it is flat. it aint until the grass is removed, it took me like 1 hour to figure out yesterday when i was trying to build my ore smelter.
hope that it helps you

This means all or part of the terrain isn't appropriate. You have the issue with forests as Nimmeth states, and then other types, such as clay,lime, and sand, can't be built on at all.