What does this mean? He can only summon if on a settlement?
Right; see the second paragraph under "Monster Abilities" on p. 21.
"If a monster’s ability is followed by a map trait icon, that ability can only be used in a space with the matching trait. Similarly, if a monster’s ability is followed by a stance, that ability can only be used against an adventurer in that stance. For example, Ambush can only be used in an Outside space. Pursue can only be used against an adventurer in Bold stance."
This may be what is adding to the confusion:
"Summon x If this monster is still alive at the end of its first combat round, draw a monster from its deck & add that monster to the fight. If icons are listed, draw a card or cards from the indicated deck(s). Pink ( ) indicates the Law deck (Summon adds one Wetlands & one Badlands monster to the fi ght, for example)."
From what I understand, if the ability (such as Summon) is followed by a Map Trait Icon, that space icon is a requirement. If the Summon is followed by a deck color, you draw from that specific Region's deck.