[ema]

I think Gothic II did this really well. While there are some clear borders a lot of the transitions between the three categories are gradual and organic. You're mostly safe in the secondary settlements but go too far into someone's backyard and you might suddenly find yourself fighting for your life. It also managed to make the place feel expansive without any place feeling like repetitive filler content.

[btschaegg]

Came here to comment on Gothic, too. I'd have picked the original Gothic even more as an example, though -- there, you are in a prisoner colony, even if you are in a settlement. Anger the wrong people and you won't survive the experience for most of the game.

Also the swamp camp is really close to some rather deadly creatures if you're not careful in the early game.