formation vs settlement

formation and settlement both are nouns.

Word	Noun	Adjective	Verb	Adverb
formation	Yes	No	No	No
settlement	Yes	No	No	No

As nouns, settlement is a hyponym of formation; that is, settlement is a word with a more specific, narrower meaning than formation:

formation (noun)	settlement (noun)
the act of fabricating something in a particular shape	termination of a business operation by using its assets to discharge its liabilities
the act of forming or establishing something	the act of colonizing; the establishment of colonies
creation by mental activity	something settled or resolved; the outcome of decision making
a particular spatial arrangement	a conclusive resolution of a matter and disposition of it
an arrangement of people or things acting as a unit	a body of people who settle far from home but maintain ties with their homeland; inhabitants remain nationals of their home state but are not literally under the home state's system of government
(geology) the geological features of the earth	a community of people smaller than a town
natural process that causes something to form	an area where a group of families live together