The answer, I think, is found in the original purpose for the World of Greyhawk Fantasy Setting. It’s a game!
Greyhawk wasn’t published as a world-building exercise. It was not intended to be an experiment in scientifically and historically accurate game design. It was designed to accommodate the very specific needs of gamers playing the Advanced Dungeons and Dragons (1E) game system.
In that game system, there are two tensions at work. The first is the need for the players to have room in which to expand to play the famed “end game” of AD&D; clearing land, building keeps and towers, and eventually attracting settlers and taxing them. This, I think, is the reason that most of the small villages that are portrayed in the game are shown outside of the normal feudal system of government; who was ruling over Hommlet before Burne and Rufus decided to set up their fortress? By having hexes that are mostly empty, there is plenty of space for players to set themselves up as described in the DMG.
The second, I believe, is the need of the DM to not be overwhelmed by needless detail. Why are Hommlet and Nulb the only villages in their respective 30-mile-across hexes?
Because from the standpoint of the DM, that’s where all the action is! If there were a historically-accurate density of villages and farms on those hexes, the player characters would be overwhelmed with choice. “Which village with an inn is the one that we should concentrate on? Let’s pick this one! I think the name’s neat!” That requires the DM to then have exacting detail on all those villages or be willing and able to make up such detail on the fly.
Having a limited number of settlements from which to choose is the wilderness equivalent of a dungeon crawl. By limiting the players’ choices, the DM makes his own job infinitely easier.
Also, it is much more difficult to justify wandering wilderness monsters in a thickly settled location. There’s a bulette in that valley? Why haven’t the inhabitants of the three villages within 5 miles banded together to dispatch the nuisance? That question answers itself when those villages aren’t there.
Quite simply, having such isolated settlements might not be historically accurate, but they sure make the DM’s job easier.
I've always thought it was a mistake to equal D&D worlds to medieval europe demographics.
Lots of things made that specific situation happen, which probably wouldn't in a D&D world.
For one, having monsters. In Europe, they basically had what, hogs? Wolves and bears were pretty much wiped out ages ago.
And basically there were no wandering tribes of barbarians to worry about. Heck, Europeans had been the barbarians to the Romans and other ancient civilizations. Now they were civilized too.
I find Greyhawk so sparse to stretch plausibility. In short it doesn't work well with the established borders. Just too much empty space.
However I don't think a realistic presentation of the medieval landscape is very interesting or playable in the type of fantasy D&D depicts.
For me the ideal compromise is the setup of the Island of Harn. It has a dense concentration of population yet not so numerous that it blots out the wilderness.
Morso I wouldn't use manorialism, instead what works better with D&D in terms of playability, approachability for modern day players, and historically how the setting were presented. Is a landscape dominated by individual farms centered around a half day travel to a larger market village. The poor rural inhabitants are sharecroppers (yes sharecropper existed in ancient and medieval times) and are not serfs.
Will further point out that Gygax actively discourages the traditional feudal hierarchy for common folks in the DMG. On page 94, serfs require considerably more outlay (because of the need for added guards) than a free peasantry.
A possibility might also be that the Flanaess is still growing into the expectd normal demographics. The Migrations weren't because of overpopulation or lack of resources in one region, it was because their homeland was nuked and with it a good segment of the population. What the Flanaess is, in a certain sense, is a post apocalyptic setting. The survivors start reproducing again then drive the indigenous dwellers to the fringes (be it Flannae, Elves or Orcs). Put another way, what you have is a Black Plague level extermination event, but with the added fact that the survivors don't get to enjoy the freed up land, water, food or infrastructure but instead have to move a continent away and start over from scratch.
I always figured the DM was expected, if he so desired, to fill in a few villages, towns, hamlets, and whatnot where appropriate. To pick an area for them to adventure in for a time and flesh it out a bit.
One of the reasons Greyhawk is so viable given its age is that it >is< so empty. DMs are given vast 'white space' to either fill in with their own villages or simply leave blank wilderness at their leisure and depending on how much time they want to invest in it all.
Overall, I agree with Jeremy's statement: The 'real' world didn't have to deal with dragons and other monsters- to say nothing of ravening hordes of humanoids. If you're looking for an 'in-character' reason as to the sparse population, that's about the best. To me, Greyhawk always felt like it was 'clusters' of civilization, defended and maintained by high-level adventurer (or ex-adventurer) types. Outside of that, the land was ruled by monsters- though (as evidenced by the exploits of various adventuring parties) that 'domain of beasts' was being pushed back all the time.
A note on Hommlet:
I can imagine there already being a small village in that area because of the druid grove. After the pre-module events in TOEE, Verbobnc (Veluna) saw fit to fortify the area with Rufus et al.. Why Nulb was never secured in the same way remains a mystery to me.