How to make a town:
First of all before doing anything, find the area you want your town to be at.
When you have found the right place you will first type /town new (name) example: /town new Brierie
This command will claim the first chunk of your town which is the towns Home Plot.
Each plot is a chunk (16x16 blocks) which can be seen if you turn on the grid on your minimap
You will then need to put money into your town bank so that the town can pay for the daily tax
To do this type /town deposit (amount) example: /town deposit 500
How to expand the towns land:
First of make sure the town has enough money to buy more land
To do this type /town
If you have enough money go to a chunk of land adjacent to the claimed chunk of your town
Then type /town claim
This will claim the chunk of land you are stood on
How to set up plots of land for each of your town members: Having plots for each member is a very good idea if you plan on having players you don't really know, this is because no resident will be able to access other residents items on their plot even though they are part of that town. This overall means you can create big towns with out having issues of having to trust every one.
First of all the plot of land has to be claimed by the town
On the plot of land you want to set up for a resident type /plot forsale (amount) example: /plot forsale 40
Set to 0 if you want the plot to cost nothing for the resident to claim
Once you have done that, get the resident to walk onto the plot then type /plot claim
The plot will then be given to the resident meaning they can set their own permissions on the land and build if your general town land is set with residents set to do nothing on it. Here is the command list link here : http://code.google.com/a/eclipselabs.org/p/towny/wiki/Commands