I see what you mean. The BAS map for Barnes Township shows Fargo and West Fargo reducing the township to a tiny sliver, but that contradicts how locally produced maps depict the township. The Census Bureau sometimes overindexes on governmental authority, since demographic information is reported in service of governments. Maybe they’re only counting the unincorporated areas subject to the township’s zoning ordinance. For boundary mapping purposes, the nominal jurisdiction would matter more, so I agree that North Dakota’s townships should remain at level 7 (and similarly for South Dakota if the situation is similar).
Ah, you’re right, I misread the Census Bureau explanation. It’s just referring to charter townships, but there’s nothing stopping a charter township (which is like an incorporated place) from also containing a village (which is an incorporated place). Level 7 it is.