Let's break it down into parts and explain it in sections. "Manufacturing and trade" - this can be thought of as building, making and selling things. " soon gave rise to towns" - there was work in 'manufacturing' so people moved there for jobs and the small village grew. Think of the towns that develop around oil and gold. 'Which' - in this context you can read it as 'that', it's being used to show that the rest of the sentence is a characteristic of the towns. I'll give you some examples of 'which' at the end. "enjoyed an importance all out of proportion to their numbers" - most towns are important because they have a lot of people living in them. These towns have a small number of proper living in then but are extremely important. The reason they are so important is because they provide a very expensive product, e.g. gold, oil, even water in some places. I hope that helps. Similar examples of 'which': * The cat gave birth to a kitten which was loved by everyone. * I peeled and ate an orange which wasn't mine. * The shop offered a discount which led to increased sales.

It means that those towns that prospered due to the manufacturing and trade had more importance than would be expected based on the number of towns or their size. For further information on relative clauses, see Wikipedia. http://en.wikipedia.org/wiki/English_relative_clauses#That_and_which

"Which" is a pronoun that is used instead of the noun "towns"