Horse carrying pack let loose in town square (11)
I believe the answer is:
marketplace
'town square' is the definition.
'horse carrying pack let loose' is the wordplay.
'horse' becomes 'mare' (mare is a kind of horse**).
'carrying' is an insertion indicator.
'loose' is an anagram indicator (letters are loosened from their original positions).
'pack'+'let'='packlet'
'packlet' is an anagram of 'ketplac'.
'mare' placed around 'ketplac' is 'MARKETPLACE'.
'in' is the link.
(Other definitions for marketplace that I've seen before include "Commercial arena" , "The world of buying and selling" , "World of commercial transactions" , "Scene of buying and selling" .)