I reckon it refers to population settlements on river basins and coasts, because of their economic viability.You have to shed on major population clusters in South Asia like Ganges Brahmaputra region, Indus Plain etc

Also since physical environment includes other features like mountainous terrains , forests, plains etc which may also encourage population settlements because of their life sustaining attributes.So you can also mention regions where people have decided to live because of Primary economic activities.Like for instance forests provide game, wood, fruits or land for cultivation. Similarly, mountains can have mineral deposits, spurring industrial and economic growth, thus serving as suitable regions for people to inhabt.