As a non-American, I’m very confused by this. If it’s a town, it’s not rural by definition. Because, you-know, it’s urban.
Also, could we get a definition of town vs small town. Do you not have the concept of a village? (Village in the UK would be a settlement with a population of a couple of thousand, with usually a pub, local shop, maybe a post office and primary school if you’re lucky).
Colloquially, it just means a small municipality. A “rural town” is a small municipality that is not near a larger metro area.
Town has a specific meaning in some states. I’m from Ohio. There is no such legal meaning here. Any municipality over 5k residents is a city. Anything other than that is a village. I am from a city with a population of about 6k. Outside of the city limits is farmland. I would say I’m from a small town/rural area.