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In this case, both "stands" and "is located" are technically correct, but they can convey slightly different nuances:
"Stands": This term is more poetic and might be used to give a sense of permanence or prominence to a settlement. It's often used when describing something that has a strong physical or symbolic presence.
"Is located": This is more neutral and straightforward, commonly used in geographical descriptions. It simply states the position of the settlement relative to another without any additional connotation.
For Wikipedia, which aims for a neutral and encyclopedic tone, "is located" is generally more appropriate. It's clearer and avoids any possible interpretation that could arise from more figurative language like "stands."