So you're saying this one town of 1,000 people has at least two people capable of casting 3rd level spells?
Yes, one level higher than the random settlement generator chart.
So I would not say "The numbers of spellcasters is far higher that that chart suggests"
You're also ignoring the Druid Avarthel, so its at least 3 x named PCs capable of casting 3rd level spells (plus of course anyone else in town, such as the PCs).
Yes, I read and copied over the settlement statblock including the important NPCs which listed the highest level casters and did not search the entire description so I missed the 5th level druid not listed in the stat block.
So yes 3 stated NPC casters. And the random generators would indicate a couple lower level ones as well.
In a small town of 1000 people.
Meaning this small town has access to (just the NPCs) the curing of all diseases, the curing of any blindness or deafness, able to have any serious wounds healed instantly, the ability to speak with dead family members and compel criminals to tell the truth (murders beware!) and thus solve most crimes, have rain fall on their crops at will, the creation (and purification) of food and water, have objects instantly repaired, all languages translated, accurately predict the future, and have paralysis cured.
And that's just the Cleric!
Those are all things way beyond even our own technology, today.
Sure. That is consistent with the high magic default of 3.5 and mostly within the default charts (randomly generated 1000 person adult population small towns get max caster level of 1-4 so no 3rd level spells and mostly no 2nd level ones).
A few quibbles exist as to whether
augury can usefully predict the future given the failure chances and limited scope,
create water's instantaneous "downpour" of gallons would be considered rain, and the efficacy of the save negate's
zone of truth's ability to solve most crimes.
This is however far from:
"Even a village of 100 or so has a wizard or sorcerer or two, a druid and a few clerics. Every town of 1000 or so has an archmage, and several lower level spellcasters, and cities of 10,000 or more have literally several archmages, dozens of powerful clerics to several Gods (and their clerical followers), druids, bards and you name it."
According to the charts a randomly generated small town of 1,000 would have a max of 4th level casters not archmages, and a small city of 10,000 would have max 10th level casters, not literally several archmages.
Looking at the first 3.5 module I pulled out the intro small town exceeds those numbers by one level, so fairly consistent with the high level default of the 3.5 DMG, but a little higher level on the casters. But still way below an Elminster in every Dale.
Moving on to page 9 of
Red Hand of Doom there is the small city of Brindol with a little less than 10,000 but in the same population category population range as a 10,000 adult population small city:
Brindol (Small City): Conventional, nonstandard; AL NG, LE; 15,000 gp limit; Assets 6,300,000 gp;
Population 8,400; Mixed (81% human, 8% halfl ing, 5% dwarf, 3% half-orc, 2% gnome, 1% elf).
Authority Figures: Lord Kerden Jarmaath (NG male human fighter 8), Lord of Brindol; Lady Verrasa Kaal (LE female human rogue 9), leader of mercantile House Kaal, to whom everyone seems to owe money or favors.
Important Characters: Captain Lars Ulverth (LG male human fighter 7), leader of the Lion Guard;
Immerstal the Red (CG male human wizard 9), foremost wizard of the town; Rillor Paln (NE male human rogue 11), master of the Black Knives, a gang of highwaymen and cutthroats based in Brindol and secretly allied with House Kaal; Eldremma Axenhaft (LN female dwarf fighter 4/rogue 3), a merchant and provisioner who hires mercenaries out as caravan guards;
Shining Servant Tredora Goldenbrow (LG female aasimar cleric 8 of Pelor), most prominent cleric in town.
So consistent with the 3.0/3.5 DMG random population guidelines of max 10th level casters.
Individual level 8 and 9 casters are fairly amazing, but still not at the level of literally several archmages.