A big problem with the game is that it discourages peaceful coexistence. Having newbies settle in your neighbourhood is a bad thing. They forage your herbs and hunt your game, and if there's a lot of them they interfere with respawning of these things. The only rational response is to exterminate your neighbours before they get too established. People often bring up trade as a potential benefit to keeping them, but thanks to Boston you can simply trade with people who don't live close to you and still keep your area just for yourself.
What I think should be done is making neighbours a boon rather than a nuisance. And the most natural existing mechanic to use for that would be the darkness. There should be a fairly large radius around Boston with an overcast afternoon level of light, which should be about the same as the current light areas (no humour drain). Player activity should push up the local levels as well as push back the border of the real darkness if it's within like a 10 minute walk. The idea is to ensure there's enough space for hermits with modest humours to settle. Player activity should be some kind of a compound measure of buildings present and players playing (consuming stuff, crafting stuff, planting fields etc).
Anyway, the more densely populated an area is, the brighter it gets, but it also becomes worse for hunting and foraging due to competition - even if the current spawns on map load are replaced. Of course, to balance it out, the light should have it's benefits. For example, crop growth speed may be influence by the level light.
What I'd really like to see, though, is having a certain light prerequisites for construction of high end buildings (which should either decay or cease to function if the light drops too low). So you might need to have some fields going before you can build a farm house if you're a hermit. If you want a windmill, you'd need a cluster of 2-3 developed farms. Getting a town bell should take like half a dozen clustered homesteads, so it would no longer be possible to drop a town claim on a hermit to take over his place. Town flags should also take a certain level of light, of course. Higher population densities would unlock fancy stuff like those multi-story brick buildings. The idea is to have the boondocks look like the boondocks, and the cities look like cities.
One of the points of getting the light really high would be getting access to "wonders", ie top end buildings that give a certain boost in a radius. A cathedral could boost the Faith & Wisdom yield of all inspirationals studied in it's area. A statue of a great general could boost the nearby defenders' damage in combat. There should be tiers of these buildings, so smaller towns can get something too.
Additionally, there should be tiered production facilities. A smithy would require a hamlet, gunsmith would take a small town, and the biggest cities would have cannon foundries and shipyards. There could also be shop tiers, with more slots and better security in bigger settlements. I think that with this we could have a nice natural development of settlements. I recently watched Deadwood and I loved how over the series the town went from tents to stone buildings.
Finally, the size of the settlement should determine the availability of defences. Stone fences and braziers for hermits, palisades and towers for towns, and city walls and cannon towers for cities.
The overall idea is to encourage the top tier players to compete to attract settlers. This would foremost mean maintaining law and order in their city, so newbies could have a relatively safe place to get started. Of course, there's always the drawback to living in a city - scarcity of forage and game. So when they get on their feet, they'll either strike out into the frontier where there's more resources, or start a business in the city to make the silver for buying those resources from the frontiersmen. Access to higher tier infrastructure should give the civilization the manufacturing boost needed to keep the market balanced. So yeah, people would have a choice between safety of the civilization and the dangers and opportunities of the wilderness. The formation of the cities would also lead to a lot more player interaction, which would do wonders for player retention.