A nice little article to get you thinking about how a location came about and how limitations of the area may cause it to grow or collapse.
Corroded Scorn, a city in Metal Overtüre was built entirely around the concept of a trade hub. Its limitations is not a resource such as food, instead the major limitation of the city is its lack of space.
Almost always the main reason why a location was settled remains a reason why it has continued, or changed over time. The camp area at the crossroads started out as a place to stay by the caravans because they trade, and take goods to the markets they are more familiar with. This would save the caravans time and money on their travels. Other travelers start using the campgrounds because they know it is a place to be able to buy and sell. After a while an inn is built, nicer rooms, already cooked food, and a place to corral the animals. After that a blacksmith sets up shop, followed by a general merchandise store. And, a town is growing. This has happened all over our world in basically the same way. This is a pattern that easily repeats itself.