What is meant by a "congested area of a city/town/settlement" in FAR 103?
I could not find a definite definition of congested area.

As mentioned here:


  [...] neither the FAA nor the NTSB has ever provided [...] a precise
  definition of [...] a "congested area." Rather, a "congested area" is
  determined on a case-by-case basis. According to the Board, "the
  determination must take into consideration all circumstances, not only
  the size of an area and the number of homes or structures, but, for
  example, whether the buildings are occupied or people are otherwise
  present, such as on roads."


The same is echoed here:


  [For the definition of congested area,] FAA and the NTSB have opted
  for taking a "case-by-case" approach in determining how to apply
  certain terms.


AOPA states that:


  Congested areas. "Over any congested area of a city, town, or settlement, or over any open air assembly of persons, an altitude of
  1,000 feet above the highest obstacle within a horizontal radius of
  2,000 feet of the aircraft." The FAA does not define congested area in
  the FARs or in the Aeronautical Information Manual. Interpretations in
  low-flight enforcement cases are not consistent for purposes of
  drafting a precise definition. Such a determination is usually decided
  on a case-by-case basis, and in the cases that we've seen, congested
  has been interpreted rather broadly. For example, a highway with
  moderate traffic was found to be "congested," as was a seaside area
  where 200 to 300 persons were sitting on the beach or bathing in the
  water.


The same can be seen here, and here, and here.