When I transitioned from Octopath Traveler 2 over to 0 I was kind of delighted to see a couple of changes such as the having 8 members to your party and also a town-building section that can take a lot of your time and also is a rather large part of the story's progression.
In the previous game (I never played the first one) your progression was determined by using individual characters and this could make the path of one person to the next differ greatly depending on which character they decided to focus on first. In 0 there is a main central character, but there are so many other characters that it can be a bit daunting to even remember which character is which.
At first the town building is kind of fun and this starts to get even more interesting as you start to develop farms and gardens both of which contribute to food boosts that you can prepare for upcoming battles. The boost isn't huge, but it is more than zero so ok, I'll take it.
You make houses for the invites you make to your village and a lot of the village progression is tied to how many new citizens you get in your town. You are able to build more houses for people as time goes by and when this happens I am not really sure how this boosts your ability to do anything in the field.
To me this seems like a really big side quest that to some people it might be interesting.
There are a lot of optional decorations that serve no purpose other than beautification and well, ever since the SIMS forced this upon me 20 years or so ago, I don't really find a great deal of appeal in putting plants down that don't do anything. They force you to put some level of decorum down, but I just took whatever was closest on the wheel and put 5 of them side-by-side. It's just not what I like to do in a game.
For many though, maybe this is fun but for me I find it to be a rather bizarre addition to what is primarily an RPG.
For me, I just do what it requires me to do in order to move on and then I promptly move on right away. It was a while before I even realized that you are supposed to assign living quarters to the citizens and I think that the devs missed a wonderful opportunity here to have the various unhoused citizens wandering the city looking forlorn until you give them a place to stay. The people you do give housing to will on occasion have some sort of gift for you that is mostly useless, but I find it rather annoying that I have to go and visit each and every person in their houses in order for them to give me something that doesn't really have a huge purpose in battle. I am yet to receive anything of consequence from the peasantry, to the point where most of the time I don't even bother to check to see what they have for me.
The town building to me seems like something that you are forced to do to some degree but it isn't an essential part of the game. Some areas are locked until you do advance the city, so in a way at least some of the game's content is locked away until you comply and do the building duties.
I will say this though... Do not stack houses in front of one another because this is going to make finding the door of the house in the back a tedious process and it's more annoying than it is space saving. They provide you with more than enough space for all the houses, so just go ahead and put them side-by-side. Remember that you can always move any structure later (except for the farms and pub) so don't feel like there should be a huge amount of thought that goes into building placement.
Moving buildings is instantaneous and requires no resources.
For me this is kind of just ok and I with the progression had a bit more impact on the overall story than it does. But I guess that they needed to evolve the game a bit and this accomplishes that. To me, it doesn't really add as much to the game as I had hoped that it would.