In Norwegian “by” is the word for town or city. In the past, cities were categorized as kjøpstad (market town) or ladested (small seaport), with special rights assigned to each. The special trading rights for cities were taken away in 1857, and the classification was entirely abandoned in 1952 and replaced by the classification by. Beginning on January 1, 1965 the municipalities (rather than their component cities) became the focus of local government. In Norway, municipalities were now classified as bykommune (urban municipality) or herredskommune (rural municipality). The Local Government Act of 1992 reversed this new classification system.
Between 1960 and 1965 many Norwegian municipalities were merged. Before 1996, the Ministry of Local Government and Regional Development awarded city status. Now city status is decided by each municipality council and then is formally accepted by the state. Since 1997 a municipality must have at least 5,000 inhabitants to declare city status for one of its communities.
Oslo, founded in 1000, is the largest city and the capital of Norway. From Wikipedia