Here's why:
* Common nouns refer to general, non-specific people, places, or things.
* Proper nouns refer to specific people, places, or things (and are capitalized).
Since "village" refers to a general type of community, it is a common noun. You could say "The village was bustling with activity" or "She lived in a small village by the sea." We're not referring to a specific village in those sentences.