Answer: Urban settlements are classified by their dominant function, i.e. the main economic activity of most of their working population.
- Administrative towns: seats of government, e.g. New Delhi, Washington D.C., state capitals.
- Industrial towns: dominated by manufacturing, e.g. Jamshedpur, Bhilai, Pittsburgh.
- Commercial / trading towns: e.g. Mumbai, Kolkata, Agra.
- Transport towns: ports and railway junctions, e.g. Kandla, Visakhapatnam, Mughalsarai.
- Mining towns: e.g. Jharia, Digboi, Kimberley.
- Garrison (cantonment) towns: e.g. Ambala, Mhow.
- Educational towns: e.g. Oxford, Cambridge, Varanasi.
- Religious and cultural towns: e.g. Pandharpur, Shirdi, Varanasi, Mecca.
- Tourist / recreational towns: e.g. Mahabaleshwar, Shimla, Ooty.
Most big cities are multi-functional, but a town is named after its dominant function.