Click the "map" button in the upper right-hand corner. Then, click and drag the map to move it around. Look for a spot that has nothing else on it - no swamp, no lake, no hill, no desert, no forest, no grassland. Hover over that spot - it should say "flat". Click it, and it should ALSO tell you it's a flat, with more detailed information.
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A valley in Evony is a Flat, Lake, Desert, Grassland, Hill, Forest.
A flat is the only land which you can conquer and then build a new city upon.
Send troops to attack the flat and as long as you got empty space for valleys in your Townhouse, you will occupy the flat when you win the fight.
It turns to NPC of the same level of the flat you built it on.
You cannot. You can wait for the flat to naturally elevate as the server cycles otherwise the NPC is based on the level of flat you obtain it as... Flat 1 = NPC 1 Flat level 10 = NPC 10 so on...