Hi Manpreet Kaur,
on/in the village square = sur la place du village
à la place = instead of
These prepositions can change the meaning of phrases but there is no hard and fast rule about which you have to use, you have to learn them as they are.
For instance, if you say in English -
I am on the plane
In French, it is,
Je suis dans l'avion
because if you said, 'sur l'avion', we see you on top of the plane, very brave!
