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Some questions about this Chinese paragraph.

I have some questions about the following Chinese paragraph, or rather my understanding of it.

北京的传统民居是胡同和四合院。
“胡同”就是小街。“胡同”二字在元代写成“通”，明代以后才叫做“胡同”。一般认为“胡同”是蒙古语“水井”的意思。因为有人聚居的地方一定要有水源，也就是水井。北京城区从元代开始就以水井为中心来划分居民区。

1: Am I translating this line correctly?
北京城区从元代开始就以水井为中心来划分居民区。
In Beijing from the Yuan Dynasty wells were regarded as the centre point when dividing residential areas.

2: I have to explain how hutongs got their name.
My understanding is: It's because hutong means well in Mongolian and residential areas had to have a source of water and at that time that source would of been a well, right?

Thank you.