This project took a lot of time and effort but I love it!  It makes it all worth it to see my little girl play with it. 
This idea and basic pattern came from http://www.cookcleancraft.com/2009/01/tutorial-felt-car-play-mathouse.html
I wanted my play mat to be small enough that I could take it places like church and it wouldn't take up much space on the floor so I basically just divided the pattern in half (all except for the handles).
Even though this house it tiny I can still fit three cars and a motorcycle inside and I bet I could fit more :)
There's not a pattern for the town, you just make it up to be how yo want it to be.
Here's our church...                                                                    
 Hospital...                                                                                   
This is our dream house. :)                                                                      
Neighbors...                                                                           
 And a park :)                                                                                
Ta Da!