Villages and cities are two distinct terms that refer to very different municipal entities found everywhere. The terms are not at all interchangeable--they are found on opposite ends of the population curve.
With some metropolitan areas now measured by the tens of millions, a city can have a very large number of people. On the other hand, a village has a population that is often measured in the thousands or even less than that.
By necessity, a city is a very large area. In a village, the population might live close together, covering a small tract of land.
A village often exists in a remote area with limited access to larger cities and towns. In some cases, a village might be located on land that is of marginal use. Cities cannot exist in such a place and are often centered in areas of high productivity.
Due to its small size, a village is limited in the amount of goods and services that in can produce. By contrast, a city can be very efficient and productive. This comes not only from having a large population, but also a populace that is diverse and skilled in many different professions.
Cities are often located at major crossroads or situated on a major trading route, perhaps alongside a river. Villages may be at the end of a major highway or possibly located a long way from a major trading center.