Small towns play a key role in providing services for its wider hinterland. However, emerging economic importance of the largest agglomerations and increasing involvement of settlements in urban networks have transformed a relationship between the size of settlements and their expected urban function. In this context, the concepts of “borrowed size” and “agglomeration shadow” serve to explain the impact of network externalities on urban function but pay a little attention to service function of small towns. The paper aims at revealing the extent to which the provision of services is determined by location of small towns within a regional urban system strongly affected by a metropolitan area. The results show coexisting occurrence of the processes of borrowed size and agglomeration shadow and the importance of tourist and commercial attractiveness of particular places (towns) to final provision of services.