Include any larger focal towns/cities, but also include any neighborhoods or suburbs you serve if they have a reasonable population. (Particularly if the residents might search for your services in their area specifically.) Smaller towns will have less potential business, but usually are also less competitive and more affordable for ad targeting.
What services do you offer? We typically try to create service-specific landing pages to capture potential clients searching for those things specifically. These can be your more profitable services, or just those you enjoy providing. Please provide specific services in addition to your general line of work.
We will avoid referencing these services in your marketing.