Large settlement requires wisdom to discount substantial account (4)
I believe the answer is:
city
'large settlement' is the definition.
'wisdom to discount substantial account' is the wordplay.
'wisdom' becomes 'sagacity' (sagacity is a kind of wisdom).
'to discount' is a deletion indicator.
'substantial account' becomes 'saga' (long narrative account).
'sagacity' with 'saga' removed is 'CITY'.
'requires' is the link.
(Other definitions for city that I've seen before include "Densely populated urban area" , "Large urban area" , "Charlotte, for instance" , "See 5" , "See 2" .)