Roads are the paths needed to connect your town together. They are required when residences are built in order to connect the residences with Marketplaces. Distribution Houses need to be connected to all production buildings in order to enable them to transport the goods.
If a Residence is not connected to a Marketplace via a road, residents will not move in even if the other needs are met. If a primary production building (Wheat farm etc.) is not connected to a Distribution house via a road, it will simply produce goods until its personal storage is full, but goods will not be transported out. If a secondary or tertiary production building ( Spinner's Hut, Bakery etc.) is not connected to a Distribution House and its resource producer, it will not produce any goods until its requirements are met.
Roads are separated into two types: Dirt roads and Stone roads
Dirt roads are basic roads, and they cost nothing to build.
Stone roads are unlocked upon unlocking Vassals. They allow carts to transport goods around your town faster. Each square of Stone road costs 250 Coins and 5 Stone.