In the context of the Israeli/Palestinian conflict:
Settlements - refers to illegal makeshift "towns" (usually no more than a few trailers) built on lands that belong to Palestinians by right wing Israeli extremists who believe that the entire land belongs to them. As of 2006, these are strictly in the west bank.
Everything else (city, town, kibutz etc) - traditional meaning but also indicates that they are within the official internationally recognised Israeli border.
In the context of the Israeli/Palestinian conflict:
Settlements - refers to illegal makeshift "towns" (usually no more than a few trailers) built on lands that belong to Palestinians by right wing Israeli extremists who believe that the entire land belongs to them. As of 2006, these are strictly in the west bank.
Everything else (city, town, kibutz etc) - traditional meaning but also indicates that they are within the official internationally recognised Israeli border.