So, I decided in my latest campaign, I'd like to do more with towns. Usually I just use them as a sort of finish line on the map; as though crossing the town gate instantly transmutes your found treasures to wealth, heals everyone, restocks your consumables, and sets you out again. Then I got to thinking about Majora's Mask, and how cool Clock Town is. I haven't touched that game in many years, but I can still picture every building, tell you where all the owls are, and how the sidequests go. I wanted to do something like that.
The difficulty I immediately hit is that I don't have a very strong memetic shape for towns in tabletop RPGs. In a dungeon, I can think in terms of rooms that may or may not have monsters, and that's something. It would be a huge mistake to do a town as consisting of houses that may or may not have villagers. I also realized that most of the things I think about when I think about towns in rpgs is based on video games, and the town experience of Majora's Mask is actually entirely untranslatable to tabletop. In MM, I liked the architecture and the soundtrack; on tabletop, I don't believe in soundtracks (anything that makes dialogue harder to parse is right out) and me describing the buildings once isn't the same as seeing them constantly. In MM, I had fun figuring out which ledges to climb and jump between to get onto unlikely roofs and find treasures; on a tabletop, that'd be, what, a series of spot checks? Jump checks? Players would ask why there was a chest of money on the roof, anyway. Even the sidequests wouldn't be quite the same, because video games have a much stronger contract with the player regarding them. The player of a video game will not hesitate to become a divource lawyer after overhearing a couple arguing, slide blocks around on the frozen lake, re-arrange soupcans; whatever it takes to move forward.
The answer I arrived at after a lot of thought was to make the town an extension of the dungeon process. Just as exploration of tabletop dungeons is fun mostly because of useful things you find (Oh, I see! We can use the big drill machine to bypass the trapped hallway and get into the crypt from here!) the town discoveries should also be useful things. Players who explore might meet an archaeologist who will buy all those mummy skulls that are so hard to unload in a class 5 otherwise. Or they might find the church's missing bell and entitle themselves to free healing, or tips about where to find haunted graveyards.
In this way, players gradually acquire "town mastery" until their network of contacts and resources makes their habitual haunt more valuable to them than the capital city!
this is a line of thought that I myself have flirted with on several occassions, and have seen others deal with. I have many thoughts, but the most salient one is that of treating a town like a dungeon. there are some important differences:
1) there is no time limit like in dungeons. players can needle at something unusual for hours without fear of a wandering "monster" (as long as what they're doing is legal)
2) there are no limited resources, or it's assumed there aren't. people won't expect to run out of rations or torches in town (much less to need them)
3) if you can overcome those, it's worth noting that the "walls" in a town-as-dungeon are much "softer". a committed wizard with high levels spells might manage to plow through a wall, but it's highly unlikely compared to just wandering around the dungeon. By contrast, any imagined barriers between "rooms" are likely to be more easy to bend or break.
Along with Zak S.' Vornheim I've found this series of posts by Courtney Campbell of Hack & Slash fame to be a useful source of ideas: http://hackslashmaster.blogspot.ca/search/label/series%20%28population%20procedures%29
As for time limits, shops, guildhalls and temples don't stay open to visitors all day and historically there were genrerally laws against loitering around the city streets after dark, which would go double for a world where nocturnal monsters may occasionaly prowl along side regular criminals. Anyone trying to get stuff done in a city is going to have to figure out their schedule, especially if they're new in town and don't know the lay of the land. (sorry, no Google Maps for another few thousand years).
I never did get a chance to write a more detailed reply. ZeroSum did scoop me with Vornheim, but I will add the caveat that said book is describing a vast, impossibly large city that can't possibly be known. It's intentionally vague and at times abstract (such as drawing streets shaped like the numbers on dice faces).
Actually, a blogpost someone wrote very recently really resonated with me, The Aesthetics of Ruin by Against the Wicked City. In the blogpost they describe why ruins are so appealing, and the comments talk about renaissance era Rome and how the city was populated to at most 10% of its capacity. There are also references to artists like Hubert Robert and Piranesi. This Hubert Robert painting in particular kind of strikes me as the aesthetic you might be going for. The wood bridge finishing the collapsed stone archway is the sort of clever make-do solutions players might have to employ to properly explore a city.
I know you aren't going for a ruined city specifically because you're trying to enhance what is otherwise a place to stop and shop, but by having the populated 10% of a hypothetical ruined city sprinkled amid the ruined 90%, you could create a seamless transition from the town to the "dungeon" where exploration really shines.
However, to try and address your original intent a little more directly, I'll say that I've tried explicitly describing towns to players, usually by having them walk from crossroads to crossroads and describing, vaguely, what seems to be in each direction. I don't know about your players, but mine hated it. They wanted to be able to just ask the nearest person where the location they wanted was and then go there. I'm not quite ready to write it off yet, but I feel the need to say that you need to have buy in from players.
I think a better way might be to try and describe the scene vividly, with several notable things off in the distance, and then trying to get the players in the habit of asking followup questions that get them moving towards landmarks of interest.
Clarification: I'm not thinking of the town as a LITERAL extension of the dungeon, as an adventure site where they kick in doors. I'm thinking more that it should exist as a seperate entity that is also inextricably bound to dungeoncrawling. Sort of like how Magic the Gathering is really two games; the game where you sit down with your deck and play, and the game where you buy and trade cards and carefully construct decks.
So if dungeoneering is the game itself, towns are the metagame. Towns are where you buy and trade opportunities and bonuses and modifiers. You get back to town and get approached by two rival groups; THIS cult wants you to clear out the Dark Shrine so they can worship there. They'll pay you five thousand gold. THIS cult wants you to explode the dark shrine. They'll pay you 10k, but you have to lug a giant magical bomb that weighs a hundred stone all the way into the heart of the dungeon. Also, near the Shrine is a legendary evil beetle, and if you can catch it alive, the bug collector offers to be your monster parts fence and will permanently buy any parts you bring him regardless of whether the market class would normally allow you sell thousands of gold worth of vampire dust.
The town doesn't have to be a true adventure site in and of itself to be interesting and worthwhile.
Yeah, I realized I was going a little off-tangent with what I was posting, and I tacked back a bit at the end, but clearly not enough.
Based on what you've said, I really think Alex's Campaign Play article in Axioms should give you a large chunk of what you want. Most of these activities are glossed over, things like soliciting merchants or comissioning equipment. However, if you were to strictly use them from day 1, the town would definitely become an activity in and of itself.
There also might be something waiting to be expanded upon in the Of Coins and Commerce article. It makes a fairly detailed, ongoing minigame of investments, and some of the more extreme rolls in both luck and misfortune come with built in adventure hooks. Making a few general tables like this for many activities along with the same player choice of how risky you want to be could spice things up.
IE: How badly do you want to sell this vampire dust? Enough to deal with risky buyers? Sure hope those aren't necromancers you're selling that dust to. Or counterfeiters paying you in shaved or fake gold.
My typical method of creating a town is to work out its game mechanics first (number of families, level of NPC leader, etc.) I will then do some historical research into what towns looked like in the geography and culture I am emulating or inspired by, and then find or sketch out a map. I will then place a number of points of interest on the map. Depending on the size of the settlement I might include:
A gatehouse where PCs enter and leave the town, paying tolls and fees
A caravanserai or harbor where caravans and ships can be stationed
A place of authority (palace, etc.) where PCs can interact with the town leadership
A market place where PCs can shop, stocked with different vendors
A temple where PCs can get magical and mundane healing and holy equipment
A tower of knowledge where PCs can find sages, arcane casters, and spells for hire
A merchant's guildhouse where PCs can deposit money, secure loans, and make deals
A black market run by the thieves' guild
An upper-class inn for aristocrats and diplomats
A middle-class inn for itinerant merchants
A lower-class inn for harlots and rogues
A bath house where PCs can blunder into various NPCs
An arena where PCs can engage in or bet on gladiatorial or chariot events
Each of those locations is typically seeded with a few NPCs, each of whom knows a few random rumors drawn from a regional rumors table. Some NPCs will have quests they can assign to the PCs, either in town or taking them out of town. Some areas of town may also have quests available from town criers, "wanted" posters, and so on.
I would add Carse (from Midkemia) and the Citybook series (from Flying Buffalo) as useful city sourcebooks. Carse is a full city, and each Citybook has a series of sites and NPCs that can be dropped into a fantasy city.
