It might mean that in some universe, but it is foreign to good governance as envisioned by founders of the DOI and Constitution.
Colonies were created by Kings. States were created by colonists on July 4, 1776.
The colonists who signed the DOI did so under the aegis of the colony/state; they were not there representing a crossroad hamlet with one tavern and two houses.
The language of the DOI gives insight into their thinking: “and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish commerce, and to do all other Acts and Things which Independent States may of right do.”
It doesn't seem reasonable to think the founders viewed one small village - or even a local community - capable of sustainably doing these things.
Counties can secede and form a state. West Virginia is an example, where the Yankees fighting against states natural rights and secession use secession to create a docile state of West Virginia. You can’t make this stuff up.
“It might mean that in some universe, but it is foreign to good governance as envisioned by founders of the DOI and Constitution.”
So it might be argued it means that in our universe (/sarcasm (maybe)).
“It doesn't seem reasonable to think the founders viewed one small village - or even a local community - capable of sustainably doing these things.”
But “the people” aren’t limited to “one small village - or even a local community”. I’m pretty sure the Founders knew about the Italian city-states.
But as I wrote, you addressed the question so that’ll do.