I'm taking the demo scene (non-island one) as a basis. I will insert the villages group as a final height stage, right before the Height Output node and after the Erosion Generator:
First of all I disconnect the portal named "Height" from the Erosion node, and add a new one named "HeightToVillages" on it's place. The original height portal will be connected to the Flatten generator later.
The same procedure is done with all of the other output generators, like textures, trees and objects.
I scatter some some rare objects that would be the village centers and increase their radius so that they fill all of the village square:
Although it's not shown at the graph, I'd like to recommend you using higher Safe Borders values in Scatter Generator to prevent "cutting" your village with a terrain edge. This value should be comparable with village size, 100 will be okay in this case.
Then I flatten the village land using the Flatten Generator:
Now we've got the flat land to place houses, but it's filled with other objects like trees and stones. I remove all of them using the Subtract Generator - it removes all of the Input objects within some distance from Subtrahend ones. And since we've got several objects types each will require it's own subtract generator:
I was too lazy to subtract bushes, but they are subtracted the same way the other objects do.
Now I'm going to make "village map". It will be used to scatter houses and to draw village splatmaps. I'm using the Blob Generator to do that - it paints the input objects with round brush stroke:
In addition to the Blob setup indicated on screen I'd like to recommend making it a bit more diverse (not a perfect round shape) by adjusting noise parameters: for instance, making noise amount (A) 1 and size (S) 10.
Then I'd like to scatter houses. I'm using the Scatter Generator in Hex Cell mode with big uniformity parameter (up to 1). This places houses in a hexagonal grid, but it will not be noticeable further. Moreover I'm using Clean Up generator to get rid of all the houses that are out of the village Blob, but as I write this I realize that it's better to use Scatter Generator's probability mask instead for that:
The next thing I do is randomizing the houses by changing their types and rotations:
Now you can notice that the village is filled with a grass - there are no roads or paths between the houses. Firstly I'm going to fill village background texture with some kind of sand (temporary using yellow grass for that and adding it to already existing yellow grass with Blend Generator):
And now I'm drawing blobs under the houses with an already mentioned Blob Generator and subtracting those blobs with a Blend:
And here is what the village is finally looks like (and it's final graph):
I'm sure that it's not the only way to make a village - you can do some further enhancements with some house randomizer script or third-party tools for making the roads. But I hope that it's a good basis to start with.