Asettlement that is small or medium in size and is formed around a transportation route is called a:
cluster village
linear village
dispersed settlement
diversified settlement

Linear Village.

Explanation:

A settlement is a place where a group of people lives in buildings. The settlements have different names according to how the buildings are arranged.

It is known as a linear (or chain) village to settlements that are built on the edge of a single road, canal, or the bank of a river forming a straight line. These settlements usually have small or medium sizes and have a linear shape due to the geographical area where they settle. For example, many villages located on the shore of the coast tend to have a linear form because the buildings are usually parallel to the coast.

I hope this information can help you.

b is the right answer for this question.