"My brother lives in a small village."
Translation:Mio fratello vive in un piccolo villaggio.
I have the same problem. This seems to be an accurate explanation https://italian.stackexchange.com/questions/1248/what-is-the-rule-for-adjective-order
"In" just means "in" by itself, nothing else. "Nel" is a contraction of two words, "in" and "il" (in and the), In+il = nel, in+la = nella, in+gli = negli etc. So in the above sentence it is "in un" (in a) If you wanted to say "in the village" then you would use nel - nel villagio.
"Villaggio" non é un termine molto usato, in italiano. Usiamo piú spesso "paese"(paesino, paesello); "frazione" oppure "località" (se sono paesi che non hanno un municipio ma fanno parte di un comune piú grande), "centro abitato", "borgo"(se é un paese antico, "borgo medievale), oppure "comune".
You live in a city, you don't inhabit the [whole] city. You inhabit your apartment and your also live in it. When you get outside the confines or limits of your personal habitation, you "live" in that larger area, but you don't "inhabit" that larger area. You can also "reside" in a large area, such as a city (of which you are a "resident"), with the tacit understanding that your actual place of residence - your habitation or domicile or permanent physical home - is a much smaller building or location.
It can be said in a poetic way that the homeless inhabit the streets of the city, they reside nowhere in particular, and live wherever they go.
There isn't a big difference and you can use them as synonyms. If you find someone who wants to nitpick (cercare il pelo nell'uovo), they might say: Abito a Xxx, ma I only go home to sleep. In realtà vivo a Yyyy. Because this person gets up and immediately runs to Yyyy. There, he works, does gymnastics, goes to the hairdresser, has lunch, dinner, breakfast and snack, goes to the cinema, theater, or any other type of entertainment, hobby or commitment. When he comes home, he immediately goes to sleep. Her/his live is in Yyyy.