An urban area is characterized by higher population density and vast human features in comparison to areas surrounding it. Urban areas may be cities, towns or conurbations, but the term is not commonly extended to rural settlements such as villages and hamlets.
Urban areas are created and further developed by the process of urbanization. Measuring the extent of an urban area helps in analyzing population density and urban sprawl, and in determining urban and rural populations (Cubillas 2007).
Unlike an urban area, a metropolitan area includes not only the urban area, but also satellite cities plus intervening rural land that is socio-economically connected to the urban core city, typically by employment ties through commuting, with the urban core city being the primary labor market. In fact, urbanized areas agglomerate and grow as the core population/economic activity center within a larger metropolitan area or envelope.
(From Wikipedia, April 23, 2010)