Population decline in rural areas has been a concern for many European countries for decades. To deal with shrinking, several measures have been taken in different countries. The study focuses on one of such measures – the administrative reform passed in Estonia in 2017, which merged smaller municipalities into regional municipality centres. This article examines the impact of this reform on rural transformation, concentrating on shifts in everyday mobilities, governance, and territorial identity at the village level. The research data is contextualised with the new mobilities paradigm, examining the relational everyday materialities that include interviews reflecting on changes at the regional, structural, and ideological levels. The analysis is based on in-depth interviews (N=60) with local activists and inhabitants in three study areas in sparsely populated parts of Estonia. The creation of municipality districts with representative bodies within larger municipalities have influenced these rural villages in various ways. In some cases, it has caused shifts in the mechanisms of civil governance that shape community activism. In others, strengthened awareness of representations of the rural appeared, offering a meaningful territorial identity and self-realisation to local people. However, the study also indicates that the distribution of rural municipalities into municipality districts can jeopardise local coherence and socio-cultural sustainability.