The Cotswolds was designated an Area of Outstanding Natural Beauty in 1966; this designated area was expanded in 1991 to 2046 square kilometres.
The underlying rock is a yellow limestone, and the area is characterised by attractive small towns and villages built of this local stone. The area is particularly good for sheep grazing: in the Middle Ages, the Cotswolds were extremely prosperous from the wool trade. Some of this money was put into the building of churches, so the area has a number of large, handsome "wool churches", built of Cotswold stone. The area remains affluent, e.g. it has attracted wealthy Londoners who either own second homes in the area or have chosen to retire to the Cotswolds.
Typical towns in the area are Burford, Chipping Norton, Moreton-in-Marsh and Stow-on-the-Wold. The Cotswold village of Chipping Campden is notable for being the home of the Arts and Crafts movement, founded by William Morris around the beginning of the Twentieth Century.