Step 1: Alternate framing: contrast with dispersed settlement:
In a dispersed settlement, houses are scattered far apart, often one per farm plot; a clustered settlement is the opposite — a tightly packed nucleus of houses sharing common land around it.
Step 2: Give the definition through this contrast:
So a clustered settlement means a nucleated, densely-built habitation where dwellings stand very close together rather than being spread out.
Step 3: Final Answer:
A clustered settlement is a compact group of houses built close together in one place, as opposed to scattered/dispersed dwellings.