Neat little game. It has a ton of polish and definitely feels like there was a lot of care put into it. The little animations for screen transitions and the way the buildings pop up at the end of a puzzle really add charm. As for the gameplay, it feels like a solid game of picross.
The one issue with the concept is that without the squares forming a larger image it creates less of a payoff as the puzzle gets filled in. In standard picross the reward for completing a level is seeing the completed picture, but here it is substituted with seeing the puzzle turn into a small diorama. It is a solid replacement but it has a bit of a disconnect between what the puzzle was compared to the final result. I would say that maybe as you solve puzzles the combined town has some sort of growth. Something like completing a puzzle that turns into a forest causes trees to grow throughout the town would help here, but even something small like a population counter that goes up with each puzzle would work. As it is now the concept definitely works but the town theme feels a bit surface level. One last nitpick: there was a bit of a difficulty spike at the last puzzle for part 1.
However, for a prototype this is very good, and feels like a finished game. The overall experience is enjoyable and small touches like the dividing lines every 5 squares help make the game smooth to play. I think you almost executed the concept perfectly, just a few small tweaks here and there will really get the core of the game where it needs to be. Finally, the graphics look very nice and clean. The whole game has a cohesive art style and a strong identity.
You did a great job for a first major project, and it definitely seems like you are close to being done. If you need more feedback as you continue completing the game let me know and I'd be glad to help.