My dictionary doesn't seem to distinguish town from village. It provides four different translations namely: town, village, block or street.
I googled the difference between a village and a town:
"A village is a small settlement usually found in a rural setting. It is generally larger than a "hamlet" but smaller than a "town". Some geographers specifically define a village as having between 500 and 2,500 inhabitants. In most parts of the world, villages are settlements of people clustered around a central point."
I then checked the population of Iwami, about 11,000 人 according to Google. So it is indeed a town according to that definition. So I'm not sure as to why my dictionary app conflates village and town in Japanese. Jisho doesn't identify 町 as a village so maybe I should change my dictionary app for a different one which is more nuanced in its definitions.