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@katpatuka : 1. The whole nation can be seen as composed of thousands of county-level regions. A county-level city administrates such a region while a prefecture-level city administrates more than one region (those regions compose a prefecture-level area). A government of county-level city is the government of this county-level region itself, which administrates some township-level governments within the county-level region, and typically doesn’t administrates any other county-level region. However, a government of prefecture-level city, whose administrative level is higher than the government of county-level city, administrates several county-level governments (sometimes includes one or more governments of county-level city). 2. The difference between counties and county-level cities, as explained by @Baeurodo, is that “the the county-level cities have greater autonomous administrative authority” and the county-level cities were set in those counties with stronger economy. Districts are a bit complicate. Some large cites (city here refers to the built up area) such as Beijing, Shanghai, Tianjin, Chongqing, other large cites (built up area) with government of prefecture-level city (admin_level=5) locates are divided into several districts. When some of those built up areas expand or plan to expand to the adjacent county region, that county (or county-level city) will be ‘swallowed’ to be a district.

As for “the abandoning of townships or merging with other towns”, I don’t know if this refers to the abandoning or merging of ‘乡, xiang’. There are two kinds of township in non national autonomous places, ‘乡, xiang’ and ‘镇, zhen’. Whether it is a ‘xiang’ or ‘zhen’ is decided by its population. Simply spoken, the former one has less population than the latter. There is a tendency in some provinces (such as my hometown) to abandon ‘xiang’ and merge some ‘xiang’ into one ‘zhen’.