Water supply is most important as humans need water to survive. Settlements near water have more potential to develop.

 
A settlement's proximity to a river is important as this allows for an easy way to transport goods to other places (alternative to air transport). Rivers also provide seafood as a source of food.

 
Risk of flooding, as well as other natural disasters, is important as the safety of a settlement's citizens is vital. If in a danger zone, the structures and people must be properly prepared to withstand crisis.

 
Shelter is important, but many new shelters have better insulation and can withstand stronger winds.

 
Flat land is important as it is the cheapest surface to build on. Transportation and farms can be developed reasonably quickly. Not the best for protection, though.

 
Economic activity is an important factor if a settlement is to be a powerhouse. There has to be many available exports and other moneymakers (e.g. good flora and fauna for tourism) as a means for making money.

 
Building materials are becoming less vital as they can be easily found all over the world. There are a variety of materials available, cheap and expensive, suitable for settlements of different sizes.

 
Supply of fuel is becoming less important, especially in the developed world. Coal (widely available) can be converted into fuel, as well as other renewable energy sources. Wood is not the only option!

 
Protection hould be considered when there is a risk of being attacked by enemies. Otherwise it is far from the most important factor.