A village, then and now, is a small community with a sense of identity--that is, it is more than some houses that happen to be next to each other. Medieval villages would generally have been farming villages, where the peasants grouped together (rather than living on widely scattered farms, as is the case in most of the modern US).
A village was not just a small city. Medieval cities, which had their roots in Roman cities in all the parts of Europe that had been in the Roman Empire, were capitals and commercial and political centers even when very small by modern standards. Villages were rural, often again with Roman roots, in this case a Roman villa, a fancy home for a wealthy man from which he supervised agriculture--generally slave-worked fields under the Empire.
In southern and western parts of medieval France, a "village" might be scattered over a square mile or so, a series of farm houses, each surrounded by its fields. In more fertile and northern areas, however, a farming village would be very compact. The peasants would live close together, with the barns for their animals, and go out during the day to work in the fields.
The reason for the difference is that in areas of heavier, richer soils peasants had adopted the heavy plow, the carruca (on which see more here). This heavy plow demanded that peasants cooperate, for it was too expensive for just one family to afford, and it created long, thin fields that would extend out from the village, rather than the compact fields that surrounded the individual houses of the more scattered type of village.
Most compact villages had narrow, twisting streets, due to the houses being built next to each other with no particular thought of the layout. In the twelfth century, however, some landlords, wanting to open up previously unused land to agriculture, created new villages with low rents to lure peasants to settle, and the villages would be laid out on a grid pattern.
Rural monasteries and castles might have a village grow up next to them. Villagers living next to a castle could expect to be protected in case of war or disaster. Most villages, however, did not have an adjoining castle, though by the late Middle Ages many would have a manor house or two, the home of the richest local families. Slowly, starting in the twelfth century, villages acquired churches; before then, a villager would have to go into the city for service or baptism and burial.
In the twelfth century, village houses were generally wattle-and-daub, wood and mud and plaster, not requiring very large timbers, and were generally thatched with reeds. By the late Middle Ages, however, in those areas with good building stone, most villages were rebuilt in stone with tile or slate roofs--for one thing, they were much less likely to burn.