Medieval Lords was probably one of the better medieval city builders (in 3D) that I've played. Yeah, I was quite surprised it didn't end up as popular as it damn well should've been.
Hailing from the (French, I believe) developer Monte Cristo, I have to attribute it's relative unknown to poor marketing. Actually, looking it up a bit further, I've discovered that Monte Cristo also developed Cities XL. Cities XL is that online (pay-to-play) city builder which, without knowing details, I believe tanked recently for one reason or another. You can probably research it further if you're interested. In any case, it looks really good, I guess. On Simtropolis.com, because Cities XL is the hottest city builder to heat the mainstream market since SimCity 4, they mainly bitch about the fact that is was an online game, and its simplification from SimCity 4.
In any case, the game is not easy. You've got a lot of variables to keep track of, including food and sanity, to name two; sanity kept track of the measure of religious services provided to your plebs, FYI.
the terrain is variable, including mountains and seas. Roads are constructed free-form, so none of that grid-based construction. In a similar vein, farms are free-form, as well; you can see the farms from the screenshots, and how they appear variable in size. The buildings themselves also have a footprint free from a grid, so proper city design really depends on your skill at designing cities.
There is combat, and a campaign, but to be fair I mainly played sandbox mode, sans combat, so I can't speak much on that. Also, a map editor allows you to design maps to suit whatever fancies you've got.
In any case, the organic feel your towns have in growing from hamlets to considerable cities is there. Ultimately, the size of the towns are not limited and are determined by your skill at managing arable land and city design. It's a good game to check out.
It's a pretty tough game to find for purchase, or even to find for the purpose of not removing from an inventory; and whether you'll like it is dependent on your tastes. It suited my tastes well, as I'm into city-builders.
Read more about it, or ask specific questions. But I think it suffices to say that if you enjoyed Caesar 3 (or its derivatives) or Simcity 4, then you should probably give it a shot given that you've got the willpower to do so.