In the context of the sentence, the word "incorporated" is used to refer to towns that have been formed into a legal entity or municipality. Here are two definitions of the word "incorporated":
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(used in legal context) Formed into a legal corporation; established as a municipality or legal entity that is separate from its owners.
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Combined or united into one body or substance; included or integrated.
In this case, the first definition aligns with the use of "incorporated" in the sentence concerning towns being officially recognized and structured as municipalities.