Yes apparently it was never really explained before, and nobody ( who shares) from the player base was really aware of the actual requirement.
Many solutions were found lol.
During the discussion for 211 the devs decided to share the exact rules for assessing settlement status and how to avoid bridging errors. Saved me a ton of trouble.
It might be early in this discussion but there’s also discussion in the settlement status thread that blew up.
Someone putting it to a wiki is not a bad idea.
EDIT: To clarify it is no longer chunk dependent. The old way used chunks, the new way is per-plot resolution.