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Each town has an inn, a shop, and a clinic. At these places, you can buy goods and services that will aid your characters. At the inn, for example, you can restore hit points and spell points expended in battle. At the shop, you can trade weapons, armor, and magical items. At the clinic, you can pay for cures of poison, paralysis, and even death.
The towns are also where you can assemble and reorganize your party of characters. Characters may be created, imported from other towns, and you can also remove them from your party (effectively telling those characters to wait in town until you have use of them again).
For more information about what you can do in town, see the other help pages under the heading of "The Town Square."