With the advancement of urbanization and the continuous deepening of reforms in urban–rural systems, China’s urbanization process has entered a new era of integrated urban–rural integration. Currently, as a global “new green revolution” gains momentum, numerous countries are deeply integrating the concept of sustainable development into new urban planning. Against this backdrop, urban planners worldwide are committed to building green, livable, and smart cities that can meet the needs of the present generation without compromising the ability of future generations to meet their needs, thus achieving the vision of harmonious coexistence between humanity and nature. Characteristic towns, leveraging their resource advantages, play a significant role in achieving sustainable regional economic development. They serve as valuable references for China’s urban transformation and upgrading, as well as for promoting rural urbanization, and are crucial avenues for advancing China’s urban–rural integration development strategy. The evaluation of the development level of characteristic towns is a necessary step in their progress and a strong guarantee for promoting their construction and development. Therefore, effectively evaluating the social benefits of characteristic towns is paramount. This study constructs an evaluation model based on the grey rough set theory and Technique for Order Preference by Similarity to Ideal Solution of TOPSIS. Firstly, an evaluation index system for the development level of characteristic towns is established. Then, the grey relational analysis method and rough set theory are used to reduce the index attributes, while the conditional information entropy theory is introduced to determine the weights of the reduced indicators. Finally, the TOPSIS model is applied to evaluate the development level of characteristic towns. Through empirical research, eight characteristic towns in Zhejiang Province, China, were assessed and ranked, verifying the effectiveness and feasibility of the proposed model.